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The IMF Calls For Global Regulation Of Cryptocurrencies

Feb 23, 2023

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Discussing The Need For A Global Regulation Of Cryptocurrencies

The IMF published a about the ongoing discussion in the organization about the current state of the cryptocurrencies. All members are engaged in the discussion and they recently released a board paper titled Elements of Effective Policies for Crypto Assets. This paper discusses the key elements members agree on that must be implemented into the crypto policies.

Concerns

The members have expressed their concerns about cryptocurrencies. Their main fear is that digital assets pose a threat for the traditional financial system. The IMF strongly advises its members to strengthen their monetary policy frameworks. The organization discourages every country from making crypto assets official currency or granting them a legal tender status.
Another huge risk lies in the unregulated digital assets’ markets. The IMF fears that these won’t be able – or willing- to protect their users from financial harm. This is why the paper included several points dealing with how the actors of the crypto industry should be controlled and monitored.

To Ban Or Not To Ban

During the discussion some members even opined that it might be better to partially or even completely ban cryptocurrencies. However, the board finally agreed that banning cryptos is not the best first option to deal with them. Still there are a few members who would not rule bans out completely.

Control But Not Cripple

The IMF board also agreed that regulations must not cripple the advancing technologies. It is not their goal to stifle innovation, but rather to keep the crypto industry in line.
In order to do so the board identified nine key tasks to ensure that the crypto industry will not risk the current financial establishment.

Regulation

First of all they emphasized the importance of a stable and sovereign monetary framework. This would mean not making any digital assets legal tenders under no circumstances.

Members would also have to be careful about guarding the capital flow and they must have sufficient capital flow management measures in place. As part of this the authorities must assess the financial risks imposed by cryptocurrencies and impose an unambiguous tax regulation for them.

This also comes with creating a legal position for cryptocurrencies so that it would become part of the standing regulatory system.

The IMF would also create a wide array of laws concerning the oversight and control of all actors within the crypto industry. The monitoring system should be based on a cooperation between the members otherwise they would risk that crypto companies will try to evade the monitoring.

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