Crypto Regulations Should Be Comprehensive, Says IMF

Friday, 10/12/2021 | 17:42 GMT by Bilal Jafar
  • The financial institution highlighted rapid global crypto adoption.
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The International Monetary Fund (IMF) recently published a post about crypto-assets and their regulations. The fund asked for a comprehensive global approach to regulate digital assets.

The crypto market has witnessed significant growth in the last 11 months. The market capitalization of digital assets has jumped by more than 200% this year and touched a record high of $3 trillion in November 2021. With rising adoption, the use of crypto assets in illegal financial activities has also increased. IMF highlighted some key issues related to Bitcoin and other digital assets.

According to the fund, several digital currencies are overvalued, and the protection of crypto investors is still a major problem due to the lack of clear regulations. IMF believes that an uncoordinated global approach to cryptocurrency regulations will destabilize the financial system.

“In emerging markets and developing economies, the advent of cryptocurrencies can accelerate what we have called 'cryptoization', when these assets replace domestic currency and circumvent exchange restrictions and capital account management measures. Such risks underscore why we now need comprehensive international standards that more fully address risks to the financial system from crypto assets, their associated ecosystem and their related transactions while allowing for an enabling environment for useful crypto asset products and applications,” the post noted.

During a recent event hosted by Bocconi University in Italy, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), stated that it is difficult to treat Bitcoin and other cryptocurrencies as money.

Crypto Regulatory Framework

IMF outlined the urgent need for international collaborations to solve the technical, supervisory and regulatory challenges related to cryptocurrencies. The financial institution believes that digital currencies are changing the international monetary and financial system.

“The IMF has developed a strategy in order to continue to deliver on its mandate in the digital age. The Fund will work closely with the Financial Stability Board and other members of the international regulatory community to develop an effective regulatory approach to crypto-assets,” IMF added in the post.

The International Monetary Fund (IMF) recently published a post about crypto-assets and their regulations. The fund asked for a comprehensive global approach to regulate digital assets.

The crypto market has witnessed significant growth in the last 11 months. The market capitalization of digital assets has jumped by more than 200% this year and touched a record high of $3 trillion in November 2021. With rising adoption, the use of crypto assets in illegal financial activities has also increased. IMF highlighted some key issues related to Bitcoin and other digital assets.

According to the fund, several digital currencies are overvalued, and the protection of crypto investors is still a major problem due to the lack of clear regulations. IMF believes that an uncoordinated global approach to cryptocurrency regulations will destabilize the financial system.

“In emerging markets and developing economies, the advent of cryptocurrencies can accelerate what we have called 'cryptoization', when these assets replace domestic currency and circumvent exchange restrictions and capital account management measures. Such risks underscore why we now need comprehensive international standards that more fully address risks to the financial system from crypto assets, their associated ecosystem and their related transactions while allowing for an enabling environment for useful crypto asset products and applications,” the post noted.

During a recent event hosted by Bocconi University in Italy, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), stated that it is difficult to treat Bitcoin and other cryptocurrencies as money.

Crypto Regulatory Framework

IMF outlined the urgent need for international collaborations to solve the technical, supervisory and regulatory challenges related to cryptocurrencies. The financial institution believes that digital currencies are changing the international monetary and financial system.

“The IMF has developed a strategy in order to continue to deliver on its mandate in the digital age. The Fund will work closely with the Financial Stability Board and other members of the international regulatory community to develop an effective regulatory approach to crypto-assets,” IMF added in the post.

About the Author: Bilal Jafar
Bilal Jafar
  • 2440 Articles
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About the Author: Bilal Jafar
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
  • 2440 Articles
  • 71 Followers

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