IMF calls for coordinated global crypto regulation

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IMF Concerns About Crypto Regulation, Calls On Countries To Allow Crypto Service Providers, Global Crypto Regulation Says Crypto Is Surprised.

The International Monetary Fund (IMF) called for “comprehensive, consistent and coordinated” global regulation of the crypto industry after the global financial body raised concerns that digital assets could trigger crashes. “systemic” financial stability risks of the growing crypto industry.

The IMF made the call in a blog post on its website written by Tobias Adrian, Dong He and Aditya Narain. They argued for the need for “global international standards” to address the risks posed to the financial system by cryptocurrencies. At the same time, they called for an “enabling environment for useful crypto asset products and applications.”

The authors said countries should license or license crypto service providers such as exchanges and P2P providers in the blog post. They called for a clear distinction between investment products and services and those intended for payments, the former being overseen by the securities regulator and the latter by “the central bank or payments supervisory authority”.

They also recommended that financial institutions exposed to crypto be required to adhere to “clear requirements”, including exposure limits, investor suitability and risk assessments.

Overvalued crypto? The real fear of the IMF

In the blog post, the IMF raised concerns about the ‘cryptoization’ of emerging markets and developing economies, where cryptocurrencies ‘replace national currency and bypass foreign exchange restrictions and capital management measures’ .

In a tweet, the IMF said the crypto market was overvalued with its market value of $ 2.5 trillion.

The “Crypto” market value of $ 2.5 trillion shows the importance of innovations like blockchain and reflects that it is overvalued. Our #IMFBlog explains how regulation can preserve financial stability, they wrote.

Why the IMF needs a strategy for global crypto regulation

Explaining the need for a global crypto regulatory strategy, the IMF noted that crypto poses a “cross-industry and cross-border mandate” challenge as they cannot monitor it due to different strategies towards the adopted asset class. by different countries. “Many crypto service providers operate across borders, making the task of monitoring and enforcement more difficult,” the authors noted.

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