The International Monetary Fund (IMF) has outlined some recommendations on how cryptocurrencies should be regulated, noting that there is an urgent need for cross-border collaboration and cooperation in the regulation of cryptocurrencies.
IMF Offers Recommendations on Cryptocurrency Regulation
The International Monetary Fund published a blog post on crypto regulation on Thursday. Tobias Adrian, Dong He, and Aditya Narain of the IMF’s Capital and Monetary Markets Department wrote the post titled “Global Crypto Regulation Must Be Comprehensive, Consistent, and Coordinated.”
Noting that “crypto assets and associated products and services have grown rapidly in recent years” and their “links to the regulated financial system are increasing,” the authors acknowledged:
Crypto assets are potentially changing the international monetary and financial system in profound ways.
“Lawmakers are struggling to monitor the risks of this evolving sector, in which many activities are not regulated,” they explained, adding: “In fact, we believe that these risks to financial stability could soon become systemic in some countries.”
IMF Suggests How Cryptocurrencies Should Be Regulated
The IMF post then looks at how cryptocurrencies should be regulated. “The global regulatory framework should provide a level playing field across the spectrum of activity and risk,” the authors stated, and went on to list three elements that should be included.
First, encryption service providers, including those offering storage, transfer, settlement and custody of reserves and assets, “must be licensed or authorized,” the authors wrote. “The licensing and authorization criteria must be clearly articulated, the responsible authorities must be clearly designated and the coordination mechanisms between them must be well defined.”
Second, “the requirements must be tailored to the main use cases for crypto assets and stablecoins,” they added, noting that regulators “must coordinate to address the various risks arising from different and changing uses,” including central banks. and the securities control bodies.
Lastly, the IMF publication notes that “authorities must provide clear requirements to regulated financial institutions regarding their exposure and commitment to cryptocurrencies.”
The authors further warned that “in emerging markets and developing economies, the advent of crypto can accelerate what we have called ‘cryptoization’, as these assets replace the national currency and circumvent foreign exchange restrictions and currency management measures. Capital account”. They concluded:
There is an urgent need for cross-border collaboration and cooperation to address technological, legal, regulatory and supervisory challenges.
What do you think of the IMF’s suggestion for cryptocurrency regulation? Let us know in the comment section.
Image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not an offer or direct solicitation of an offer to buy or sell, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author are responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.