The International Monetary Fund (IMF) has unveiled a set of new regulations for crypto assets. After debating the “Elements of Effective Policies for Crypto Assets” paper, the IMF Executive Board proposed a framework to assist member countries in crafting a comprehensive, uniform, and unified policy response to crypto assets.
The IMF claims that implementing this framework can assist decision-makers in reducing the risks that come along with crypto assets, while also maximizing the potential advantages of technological advancement. The framework doesn’t constitute crypto assets as an official currency or legal tender; instead, it strengthens monetary policy frameworks to protect monetary sovereignty and sustainability.
The IMF also stresses the importance of reducing unnecessary capital flow volatility, implementing a clear tax classification of cryptocurrency assets, and imposing prudential, conduct, and monitoring standards to all participants in the cryptocurrency market. To improve the administration and enforcement of laws governing crypto assets, the framework proposes a combined monitoring system including various domestic agencies and authorities as well as international cooperation arrangements.
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IMF executive board directors emphasized that while the alleged potential advantages of crypto assets have not yet been shown, considerable concerns have developed from them. And therefore, to protect monetary sovereignty and stability, the directors largely concluded that crypto assets should not be given official currency or legal tender recognition.
The executive board members of the IMF unanimously agreed on the need to design and apply comprehensive rules, including prudential and conduct regulation to crypto assets, and effective execution of the FATF standards,” the IMF further stated.
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The majority of IMF directors acknowledged that targeted limits may be appropriate instead of full bans, depending on domestic policy goals and areas where authorities are constrained by capacity, notwithstanding the minority’s suggestion of total bans on cryptocurrencies.
For uniform execution and to prevent regulatory arbitrage, there must be strong synchronization between agencies on both the national and international levels. The IMF comes to the conclusion that it might be a major role player in future analytical work on the quickly developing realms of crypto assets.
