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.
What do you think about the IMF’s suggestion for crypto regulation? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Credit: Source link
