On Thursday the IMF has published a blog post on cryptocurrency regulations titled: “Global Crypto Regulation Should Be Comprehensive, Consistent, and Coordinated”.
The International Monetary Fund has stated:
“Crypto assets and associated products and services have grown rapidly in recent years and their interlinkages with the regulated financial system are rising. Crypto assets are potentially changing the international monetary and financial system in profound ways. Policy makers struggle to monitor risk from this evolving sector, in which many activities are unregulated, in fact, we think these financial stability risks could soon become systemic in some countries”.
The IMF then suggests in their post how cryptocurrency should be regulated.
“The global regulatory framework should provide a level playing field along the activity and risk spectrum” – stated IMF along with list of three elements that should be included.
Firstly, crypto service providers- including those offering storage, transfer, settlement, and custody of reserves and assets- “should be licensed or authorised. Licensing and authorisation criteria should be clearly articulated, the responsible authorities clearly designed, and coordination mechanism along then well defined”.
Secondly, “ Requirements should be tailored to the main use cases of crypto assets and stablecoins, and regulators need to coordinate to address the various risks arising from different and changing uses, including the central banks and securities watchdogs.”
Lastly, “ Authorities should provide clear requirements on regulated financial institutions concerning their exposure to and engagement with crypto”- stated IMF.
But they also warned that “ In emerging markets and developing economies, the advent of crypto can accelerate what we have called “CRYPTOIZATION” – when these assets replace domestic currency, and circumvent exchange restrictions and capital account management measures “.
“There is an urgent need for cross- border collaboration and cooperation to address the technological, legal, regulatory and supervisory challenges”- stated the International Monetary Fund (IMF)