IMF calls for coordinated action over fears crypto could undermine global monetary system

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The International Monetary Fund has taken a seemingly tough stance toward growing crypto adaptation with a set of recommendations for member countries and a call for a “coordinated response.”

“Widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks,” the organization said in a statement, referring to a discussion of crypto policies its board had earlier this month.

“Directors generally observed that while the supposed potential benefits of crypto assets have not yet materialized, significant risks have emerged,” the IMF said, arguing that the crypto should not be granted official currency status or of legal tender. While the admins agreed that “hard bans are not the best option”, “a few admins, however, felt that outright bans should not be ruled out”.

The IMF has raised concerns about the impact of crypto on financial stability, financial integrity, legal risk, consumer protection, and market integrity. He discussed a nine-element framework that could help member countries “develop a comprehensive, coherent and coordinated policy response,” with recommendations such as adapting “unambiguous tax treatment of crypto-assets.” .

The organization also said member countries could mitigate the risks posed by crypto by working to strengthen digital infrastructure and “alternative solutions” for cross-border payments and finance.

“Directors noted that regulation should be careful not to stifle innovation, and that the public sector could leverage some of the technologies underlying crypto assets for their public policy objectives,” the IMF said.

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