“For example, global crypto exchanges or other less secure methods, such as P2P transfers, can be used to bypass capital flow management measures; private wallets can act as a form of offshore bank account to store wealth.”
According to the fund, inefficiencies in payment systems such as a lack of interoperability among various domestic payment systems are a major problem for remittances as well as trade.
It said that given the large share of unbanked people in some emerging markets and developing economies, remittances took place through cumbersome cash-based methods, such through post offices and other transfer operators.
The IMF added the payment rails of crypto assets could make some of these services faster and cheaper, especially through the integration of stablecoins.
It said although these gains relied on access to the internet and other technologies, which were scarce in many of these countries.
“Whatever form of achievement is made by adoption of crypto as remittances will have a marginal impact on monetary policy or capital flows as the underlying crypto assets will likely be held for only a short time before it is exchanged into the local currency,” it said