IMF urges a coordinated response to cryptocurrencies

Growing adoption of digital assets requires harmonising regulators’ efforts across countries in relation to their regulation. This is stated in a заявлении by the International Monetary Fund (IMF).

Experts noted that the potential benefits of the new asset class have not yet materialised, but potential side effects have already emerged.

“Widespread adoption of cryptocurrencies could undermine the effectiveness of monetary policy, circumvent capital-flow management measures, and exacerbate financial risks,” the document says.

The IMF also noted the impact of digital assets on financial stability, legal risks, consumer protection and market integrity.

Several participants in the discussion did not rule out a direct ban on cryptocurrencies, although the overall position was that “this is not the best option.”

Experts considered a nine-section framework that could help member countries “develop a comprehensive, coherent and coordinated regulatory response”:

1. Protect monetary sovereignty and stability by strengthening the framework of monetary policy, and do not grant digital assets the status of official currency or legal tender.
2. Guard against excessive volatility of capital flows and maintain the effectiveness of measures to manage their flows.
3. Analyse and disclose fiscal risks and establish a clear tax regime for cryptocurrencies.
4. Establish legal clarity for digital assets and mitigate legal risks.
5. Develop and ensure compliance with prudential requirements, as well as conduct and oversight standards for all participants in the industry.
6. Create a joint monitoring system across national agencies and authorities.
7. Develop international cooperation mechanisms to strengthen oversight and ensure compliance with cryptocurrency rules.
8. Monitor the impact of the new asset class on the stability of the international monetary system.
9. Strengthen global cooperation to develop digital infrastructures and alternative cross-border payment and financing solutions.

“Policies should not stifle innovation. Agencies could use some of the underlying cryptocurrency technologies for public policy.”

In September 2022, IMF officials emphasised that bankruptcies of issuers, exchanges and hedge funds had become additional incentives to pursue comprehensive regulation of digital assets.

In November IMF experts urged African countries to tighten regulation of cryptocurrencies. In April CAR approved Bitcoin as a means of payment on a par with the local franc.

Earlier, the IMF criticised El Salvador’s decision to legalise digital gold and recommended depriving the asset of that status.