IMF acknowledges cryptocurrencies becoming more mainstream and calls for a global response toward regulation
The IMF believes that the best approach, for now, is for regulators worldwide to come up with a global response that is consistent, coordinated, and comprehensive.
Tue, 06 Sep 2022, 08:19 am UTC
The International Monetary Fund (IMF) has acknowledged that crypto assets have gained a more mainstream presence as hedges against weak currencies, speculative investments, and payment instruments. With the increasing adoption of digital currencies, the agency is calling for a coordinated global response that is consistent and comprehensive from various regulators.
This was revealed in an IMF report titled “Regulating Crypto: The right rules could provide a safe space for innovation” publish in the September issue of its Finance & Development magazine, Bitcoin.com reported. Aditya Narain, the deputy director of IMF’s Monetary and Capital Markets Department, and assistant director Marina Moretti co-authored the report.
“Crypto assets have been around for more than a decade, but it’s only now that efforts to regulate them have moved to the top of the policy agenda,” the report noted. “It’s only in the past few years that crypto assets have moved from being niche products in search of a purpose to having a more mainstream presence as speculative investments, hedges against weak currencies, and potential payment instruments.”
The report highlighted recent failures of crypto firms to emphasize the need for proper regulation in the space. “The failures of crypto issuers, exchanges, and hedge funds — as well as a recent slide in crypto valuations — have added impetus to the push to regulate,” the authors wrote. “Applying existing regulatory frameworks to crypto assets, or developing new ones, is challenging for several reasons.”
The authors cited the rapidly evolving crypto industry as one of the major challenges in regulating the crypto space. Regulators also find it difficult to keep tabs on the thousands of crypto firms especially since not all of them are subject to the same reporting requirements.
“For a start, the crypto world is evolving rapidly,” the authors elaborated. “Regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities. Monitoring crypto markets is difficult because data are patchy, and regulators find it tricky to keep tabs on thousands of actors who may not be subject to typical disclosure or reporting requirements,” they explained.”
The IMF believes that the best approach, for now, is for regulators worldwide to come up with a global response that is consistent, coordinated, and comprehensive. “The regulatory fabric is being woven, and a pattern is expected to emerge. But the worry is that the longer this takes, the more national authorities will get locked into differing regulatory frameworks,” the authors said. “This is why the IMF is calling for a global response.”
“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue,” the IMF officials concluded in the report.
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