The International Monetary Fund (IMF) has provided guidance to its member countries on creating effective crypto policies. The board highlighted the need to make comprehensive crypto regulations “to better mitigate the risks posed by crypto assets while also taking advantage of technological innovation.”
IMF Executive Board Puts Forward Advice On Crypto Legislation
The International Monetary Fund (IMF) announced on Thursday the results of a dialogue between the members of its executive board on a document titled “Elements of Effective Policy for Crypto Assets.”
Noting that this document presents a regulatory framework. “which can help members develop a comprehensive, coherent and coordinated policy response” The IMF emphasized the importance of crypto assets:
This framework enables policymakers to better mitigate the risks posed by crypto assets while also taking advantage of technological innovation.
The first element of the IMF’s framework is to “safeguard sovereignty and monetary stability by not granting crypto assets official currency or legal tender status.”
Other components include defending against “excessive capital flow volatility”, adopting “unambiguous tax treatment of crypto assets” and using “prudential, conduct and supervisory requirements for all crypto market players”. The Framework also establishes “a joint monitoring framework between different agencies and national authorities” and “international collaboration agreements to improve supervision and compliance with crypto-asset regulations,” the IMF detailed.
The executive board members “generally noted that while the purported potential benefits of crypto assets have not yet materialized, significant risks have emerged,” the IMF said. They also noted:
In general. The members agreed that crypto assets should not be granted official currency or legal tender status to preserve sovereignty and financial stability.
In addition, “crypto assets have policy implications that are at the core of the Fund’s mandate,” and their widespread adoption is evident “could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate risks.” Administrators were warned by the prosecutors.
The IMF also reported that the executive board members were in agreement. “on the need to develop and enforce comprehensive regulations, including prudential and conduct regulations for crypto assets, and the effective implementation of the FATF.” [Financial Action Task Force] guidelines.” The Directors also stated that the IMF “Should work closely together to assist regulatory work under the direction and guidance of standard-setting bodies.
While some members felt that outright cryptocurrency bans shouldn’t be ruled out. The IMF is known to have said:
Directors while it is agreed that bans that are too harsh will not be the best choice, there may be some restrictions that could be applied based on the aims of national policy and limitations in the capacity of authorities to do so.
Stressing the principle of “same activity, same risk, same regulation” the members noted that “strong coordination between authorities, both nationally and internationally, is essential for consistent implementation and avoiding regulatory arbitrage ”. They concluded that the IMF “could serve as a thought leader for further analytical work on rapidly evolving developments in crypto assets.”
What do you think about the IMF executive board’s guidance for developing crypto policies? Please let us know in the comments section.
