• The study considered seven variables to account for a prevalence for crypto adoption in 53 countries to determine which were most significant
  • The IMF also highlighted the role cryptoassets can play in providing transparency for procurement or other payments related to government projects

Cryptoassets have “unleashed a plethora of financial innovation that will likely revolutionize the form of money and the ways it is used,” a recently published International Monetary Fund report said, but the multilateral lender cautioned that, without regulation, cryptoassets may also facilitate illicit capital flows.

In an alliteratively titled working paper — Crypto, Corruption, and Capital Controls: Cross-Country Correlations — IMF researchers concluded that, based on crypto usage data drawn from Statista’s Global Consumer Survey, “cryptoasset usage is significantly and positively associated with corruption and capital controls.”

But the paper goes beyond identifying correlation to say that “that cryptoassets may be used to transfer corruption proceeds or circumvent capital controls” and calls on regulators to “bring empirical evidence to bear on the question of whether cryptoassets facilitate corruption.”

The researchers noted that cryptocurrencies are hardly unique in that respect, though, pointing out that the anonymity of cash, especially large denomination notes, is exploited for crime and tax evasion. 

Interpretation is key

The authors evaluated crypto adoption depending on seven variables, including inflation rates, remittances and GDP per capita, but determined that control of corruption and capital controls are clearly the most significant factors.

The question for regulators is, what accounts for the correlation?

“While there are certainly examples of bad actors using cryptoassets to circumvent oversight, these individuals are not the driving factor for the higher rates of crypto adoption we’re seeing in countries with prevalent corruption,” said Budd White, chief product officer and co-founder at Tacen, a Wyoming crypto compliance firm.

“Cryptocurrencies inherently operate outside the systems that facilitate corrupt government officials, and thus offer individuals a secure means of protecting their own assets,” White told Blockworks.

The IMF report’s authors found both factors were practically indistinguishable in terms of their significance within the survey data. But the practical implementation of capital controls is itself a highly nuanced affair, according to Gabriella Kusz, CEO of the Global Digital Asset and Cryptocurrency Association. Just because capital controls exist doesn’t mean they are functioning well, she told Blockworks.

“Consumers understand the degree of corruption inherent in their financial sector and economy and seek a financially inclusive, transparent and independent form of exchange through crypto,” Kusz said.

Transparency is commonly considered an antidote to corruption, and the paper notes that “these technologies could also be used to improve transparency and record-keeping for procurement or other payments related to government projects, thereby increasing accountability, and reducing the scope for corruption.”

That puts the IMF framing squarely in the “blockchain not crypto” school of thought. The authors specifically mention the potential of central bank digital currencies (CBDC) to “offer additional resilience, safety and availability with lower costs,” concluding that “work should continue in using the technologies underlying crypto assets to realize the potential benefits to financial inclusion and the efficiency of governments.”

The authors analyzed data from surveys of 2,000 to 12,000 people in 53 countries. They highlight a need for better data on adoption trends, citing limitations of earlier studies and a lack of sufficient high-quality data.

Yet, regulators should not wait for “conclusive evidence,” the authors contend, but should consider “the urgency of acting before it’s too late.”

However, the efficiency benefits of a CBDC are only useful in the absence of corruption. For a citizen fleeing a corrupt regime, attempting to preserve the value of their savings, the censorship resistance inherent to crypto is paramount.

So, the question becomes, “too late for whom?”


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


  • Macauley was an editor and content creator in the professional chess world for 14 years, prior to joining Blockworks. At Bucerius Law School (Master in Law and Business, 2020) he researched stablecoins, decentralized finance and central bank digital currencies. He also holds an MA in Film Studies; film credits include Associate Producer of the 2016 Netflix feature documentary, "Magnus" about World Chess Champion Magnus Carlsen. He is based in Germany. Contact Macauley via email at [email protected] or on Twitter @yeluacaM