The latest UNICEF report on mainstream adoption of digital currencies highlights the potential for greater financial inclusion as well as the need for new child safeguards. The UN Children’s Fund has called for child safeguards to be incorporated into online child protection initiatives, citing the financial and exploitative risks posed by unregulated crypto markets.
The UNICEF report “Prospects for Children in 2022,” which looks at the effects of global trends on children, predicts that cryptocurrencies will become more mainstream, “demonstrating both the promise of greater financial inclusion and the need for new child safeguards.”
The report stated “Digital currencies gained widespread interest with 87 countries, representing over 90% of the global economy, actively exploring a Central Bank Digital Currency – an increase from only 35 countries in May 2020. The market capitalization of cryptocurrencies oscillated wildly but ended the year above US$2 trillion.”
The report further stated “This revolution is expected to continue in 2022 when we should learn more about what future it will deliver. Applications of public blockchains, such as decentralized finance, are likely to reach greater maturity and present viable alternatives to traditional financial markets.”
The report even stated that “A potential alliance between governments, large banks and investment firms against challenger banks and blockchain-based finance could arise in many countries.” The COVID-19 pandemic’s economic pressures are also fueling the push for crypto’s mainstream adoption. Despite future disruptions from the pandemic, the economic recovery in high-income countries is expected to slow this year, according to UNICEF.
The report even stated “These developments will eventually require the emergence of national and international legal and regulatory frameworks. Developing countries will have to choose between adopting digital currencies of major economies, issuing their own and figuring out interoperability (the direction Tunisia appears to be moving in with the eDinar), or betting on decentralized cryptocurrencies and decentralized finance (as Ecuador has done).”
UNICEF recognises the significant benefits bestowed by financial inclusion and “frictionless remittances and more instant, transparent, and efficient social assistance programmes” with the mainstreaming of cryptocurrencies. However, the UN agency warns about the dangers that unregulated markets pose to children’s well-being, such as financial system stability and declining government revenues.