IMF Backs Crypto Regulation Over Ban, G20 Ministers Meet in India

28. February 2023 admin 0 Comments

• The International Monetary Fund (IMF) is leaning towards regulation of crypto assets over a complete prohibition.
• Kristalina Georgieva, the IMF’s managing director, expressed this viewpoint at the recent G20 finance ministers’ meeting in Bengaluru, India.
• The IMF and other organizations are working on regulatory framework guidelines to protect users and ensure transaction transparency.

IMF Favors Crypto Regulation Over Outlawing It

The International Monetary Fund (IMF), led by managing director Kristalina Georgieva, is leaning towards crypto asset regulation rather than outlawing it altogether. At the G20 finance ministers’meeting in Bengaluru, India, Georgieva stated that universal digital asset regulations are needed to protect users and ensure transaction transparency.

Stablecoins Create Fair Environment for Economies

Georgieva believes that fully backed stablecoins create an environment that is “fairly good” for economies. However, she also underscored the fact that unbacked crypto assets are speculative and high risk – not actual currency. To differentiate between state-backed digital currencies produced by central banks and openly traded crypto assets such as stablecoins, the IMF’s top priority is to regulate digital assets.

Nine Point Action Plan

The IMF has developed a nine-point action plan which states that countries should refrain from making cryptos like Bitcoin into legal cash. This plan outlines how nations should manage crypto assets in order to protect user data, safeguard consumers from dangers, and ensure transaction transparency.

Regulatory Framework Guidelines Developed Jointly by IMF & Others

Regulatory framework guidelines will be released in the second half of this year. These guidelines are being developed jointly by the IMF, Financial Stability Board (FSB), and Bank for International Settlements (BIS). They will provide advice on topics such as taxation of cryptos as well as know-your-customer/anti money laundering measures with regard to digital currencies.

Crypto Ban Not Preferred Option

Georgieva noted that if cryptos represent a greater risk to financial stability then a ban “should not be taken off the table.” However overall she prefers regulation over a ban when it comes to dealing with crypto assets since they require both technology and policy room to develop properly.