The Board of Directors of the International Monetary Fund (IMF) has guided member states in developing effective crypto policies. The board stressed the need to develop comprehensive crypto regulation to “better mitigate the risks associated with crypto assets while capturing the potential benefits of the technological innovation.”
IMF Executive Board provides advice on crypto regulation
The International Monetary Fund (IMF) on Thursday announced the outcome of a discussion held by board directors on a paper titled “Elements of Effective Policies for Crypto-Assets.”
Noting that the document sets out a regulatory framework that can “help members develop a comprehensive, consistent and coordinated policy response” to crypto-assets, the IMF stressed:
By adopting the framework, policymakers can better mitigate the risks associated with crypto-assets while reaping the potential benefits of the technological innovation that accompanies them.
The first element of the framework described by the IMF is to “protect monetary sovereignty and stability by strengthening monetary policy frameworks and not granting crypto-assets official currency or legal tender status.”
Other elements include guarding against “excessive capital flow volatility,” adopting “unambiguous tax treatment of crypto assets,” and enforcing “prudential, behavioral, and regulatory requirements for all crypto market players.” The framework also establishes “a joint oversight framework between various domestic agencies and authorities” and “international cooperation agreements to improve oversight and enforcement of crypto-assets regulation,” according to the IMF.
The directors of the board of directors “generally noted that while the supposed potential benefits of crypto-assets have yet to be realized, significant risks have emerged,” the IMF continued, adding:
Directors generally agreed that crypto assets should not be given official currency or legal tender status to ensure monetary sovereignty and stability.
In addition, “crypto-assets have policy implications that are at the core of the fund’s mandate,” notably their widespread adoption “could undermine the effectiveness of monetary policy, circumvent capital flow management measures and create fiscal risks.” worse,” the directors warned.
The IMF further indicated that the directors of the board were “broadly agreed on the need to develop and implement comprehensive regulation, including prudential and behavioral regulation for crypto-assets, and effective implementation of the FATF [Financial Action Task Force] standards.” The directors also stated that the IMF “should work closely together to support regulatory work under the direction and guidance of standards bodies.”
While some directors believed that outright cryptocurrency bans should not be ruled out, the IMF pointed out:
The directors agreed that strict bans are not the best option, but that targeted restrictions may apply depending on domestic policy objectives and where authorities face capacity constraints.
Emphasizing the importance of promoting the principle of “same activity, same risk, same regulation”, the directors emphasized that “strong coordination between authorities, both at national and international level, is crucial for consistent implementation and avoiding of regulatory arbitrage.” They concluded that the IMF “could serve as an opinion leader in further analytical work on rapidly evolving developments in crypto assets.”
What do you think of the guidelines of the IMF board of directors for developing crypto policy? Let us know in the comments below.
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