Surging inflation is driving people to cryptocurrencies
Binance claims the future is bright for digital tokens as a UN trade body warns cryptocurrencies may enable tax evasion
Binance, the world's largest cryptocurrency exchange, has claimed that more and more people are turning to crypto investing due to rising inflation.
Maximiliano Hinz, who heads up the company's Latin American operations, told Reuters that people were seeking out currencies like Bitcoin as a way to protect themselves from inflation and the rising cost of living.
As an example, Hinz pointed to crypto investments in Argentina, which he said was now one of the top markets for Binance, alongside Brazil and Mexico. Annual inflation in Argentina is at 90% and Hinz claimed that many of its citizens have poured savings into Bitcoin, despite a high-profile crash in its value. El Salvador made headlines earlier in the year for adopting bitcoin as legal tender, although cryptocurrencies have lost around 50% of their value since then.
Hinz didn't offer any statistics for the number of people investing in cryptocurrencies, nor where most were coming from. Inflation, however, is surging across the globe. In the UK, inflation is set to hit its highest level since 1982, according to the Office for National Statistics (ONS). The consumer price index rose to 9.1% in June, the highest level in the G7 group. There is also a suggestion that this is only going to get worse for Brits as households are expected to come under even more pressure with rising gas prices.
The comments from Hinz have come at the same time as the UN trade and development body The United Nations Conference on Trade and Development (UNCTAD) has called for action to curb cryptocurrency in developing nations. The body warned that they're unstable assets that can bring social risks, and that the benefits are overshadowed by the threats they pose to domestic resource mobilisation and the security of monetary systems. Another area of concern for UNCTAD is that cryptocurrencies may enable tax evasion and avoidance through tax haven-style loopholes.
"In this way, cryptocurrencies may also curb the effectiveness of capital controls, a key instrument for developing countries to preserve their policy space and macroeconomic stability," a UNCTAD spokesperson added.
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