Crypto is failing to reduce financial risks in emerging markets, but the response should be regulation rather than an outright ban, a grouping of central bankers led by Mexico and Colombia said Tuesday.

Emerging economies are popular places for people to try crypto because volatile fiat currency and a lack of access to banks make it attractive to look for alternatives to traditional finance. According to Chainalysis data, just two of the 20 top crypto-using jurisdictions across the world are from the developed world, with the likes of Vietnam, Brazil and India making up the remainder.

But promises to cushion people from the impact of inflation or offer a low-cost payment alternative are just part of crypto’s “illusory appeal,” the study said. While crypto is a popular way of sending funds overseas, it can also result in “large and sudden changes in the flow of capital,” the report warns – a financial stability impact that central bankers are normally wary about.

“Cryptoassets have so far not reduced but rather amplified the financial risks in less developed economies,” the study, published by the Basel-based Bank for International Settlements (BIS), said, adding that regulating the sector would be preferable to a full ban, given the difficulties of enforcement and risks of curbing innovation.

“The technology could still be applied in various constructive ways,” the study said, adding that regulations will need to “channel innovation into such socially useful directions.”

The advent of exchange-traded funds (ETFs) based on crypto could heighten risks, allowing a wider range of people without specialist finance knowledge to get into the market, the report said. In June, the world’s biggest asset manager, BlackRock, filed to operate an ETF based on the spot price of bitcoin (BTC) in the U.S.

The skepticism of global organizations against crypto is nothing new. In July, BIS said that crypto can’t be used as money due to “inherent flaws,” while the United Nations’ development arm has said emerging economies should bring in widespread restrictions to curb risks to tax collection and monetary policy.

The report echoes comments made by key U.S. and International Monetary Fund officials, who advocated for a similar regulation-over-ban approach at a recent G20 roundtable.

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