The International Monetary Fund (IMF) has outlined some
recommendations of how cryptocurrency should be regulated, noting that
there is an urgent need for cross-border collaboration and cooperation
on cryptocurrency regulation.
IMF Provides Recommendations on Crypto Regulation
The International Monetary Fund published a blog post on
cryptocurrency regulation Thursday. The post titled “Global Crypto
Regulation Should be Comprehensive, Consistent, and Coordinated” is
authored by Tobias Adrian, Dong He, and Aditya Narain from the IMF’s
Monetary and Capital Markets Department.
Noting that “Crypto assets and associated products and services have
grown rapidly in recent years” and their “interlinkages with the
regulated financial system are rising,” the authors acknowledged:
Crypto assets are potentially changing the international monetary and financial system in profound ways.
“Policymakers struggle to monitor risks from this evolving sector, in
which many activities are unregulated,” they explained, adding: “In
fact, we think these financial stability risks could soon become
systemic in some countries.”
IMF Suggests How Crypto Should Be Regulated
The IMF post then discusses how cryptocurrency should be regulated.
“The global regulatory framework should provide a level playing field
along the activity and risk spectrum,” the authors asserted and
proceeded to list 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 authorized,” the authors wrote. “Licensing and authorization
criteria should be clearly articulated, the responsible authorities
clearly designated, and coordination mechanisms among them well
defined.”
Secondly, “Requirements should be tailored to the main use cases of
crypto assets and stablecoins,” they added, noting that regulators “need
to coordinate to address the various risks arising from different and
changing uses,” including central banks and securities watchdogs.
Lastly, the IMF post notes that “Authorities should provide clear
requirements on regulated financial institutions concerning their
exposure to and engagement with crypto.”
The authors further 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.” They concluded:
There is an urgent need for cross-border collaboration
and cooperation to address the technological, legal, regulatory, and
supervisory challenges.
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