The International Monetary Fund (IMF), a prominent financial agency of the United States provided insights on the requisite regulatory approach to the crypto industry, underscoring the exigency for a “comprehensive, consistent, and coordinated policy”. IMF highlighted the three key “pillars” of its novel approach: a sound macro-policy foundation, clear legal treatment, and effective implementation.
Earlier today, IMF released a blog post featuring the basic prerequisite for clear rules, to protect the crypto community, and prevent market exploitation. Reflecting on the recent industry challenges including the fall of crypto firms like FTX and Terra Luna, as well as the numerous crypto hacks that stole millions from customers’ wallets, IMF reiterated the urgency of establishing clear crypto rules.
The agency showcased the threat of granting digital assets legal tender status, pointing out that the acceptance of crypto assets for tax payment, debt settlements, and fines could create fiscal risk for the finance sector, further leading to financial instability. Picturing the role of a coherent monetary policy framework in countering the challenges posed by digital assets, the IMF stated:
The defense against the substitution of sovereign currencies is the maintenance of robust, trusted, and credible domestic institutions. Transparent, consistent, and coherent monetary policy frameworks are crucial for an effective response to the challenges posed by crypto assets.
As per the recommendations of the agency, “a comprehensive legal foundation is essential to effectively regulate crypto, addressing both private law and financial law aspects”. The agency asserted that all the activities of the crypto market should comply with strict anti-money laundering and combating the financing of terrorism (AML/CFT), as well as prudential and conduct rules.
Reflecting on the Financial Stability Board’s (FSB) recent proposal for a consistent and clear crypto regulatory framework, IMF expounded that the national authorities should align their frameworks to achieve a “consistent treatment of crypto assets”. The agency added, “By embracing a comprehensive approach and implementing these recommendations, policymakers can safeguard monetary sovereignty, protect investor interests, and promote financial stability in the digital age”.
