IMF Board to Offer Guidance for Developing Effective Crypto Policies
The executive board of the International Monetary Fund (IMF) plans to offer guidance for member countries in developing effective crypto policies. The board underlined the need to develop comprehensive crypto regulations to "better mitigate the risks posed by crypto assets while also harnessing the potential benefits of the technological innovation."
The Executive Board Discusses “Elements of Effective Policies for Crypto Assets”
The International Monetary Fund (IMF) announced on Thursday the consequence
of a discussion held by its executive board of directors on a paper titled
"Elements of Effective Policies for Crypto Assets."
The paper sets forth a regulatory framework that "can help
members develop a comprehensive, consistent, and coordinated policy
response" to crypto assets. The IMF stated:
"By adopting the framework, policymakers can better
mitigate the risks posed by crypto assets while also harnessing the potential
benefits of the technological innovation."
The first element of the IMF framework is to "safeguard
monetary sovereignty and stability by strengthening monetary policy frameworks
and not granting crypto assets official currency or legal tender status."
Other elements include preventing "excessive capital flow
volatility," adopting "unambiguous tax treatment of crypto
assets," and enforcing "prudential, conduct, and oversight
requirements for crypto market actors." The framework also establishes "a
joint monitoring framework across different domestic agencies and
authorities" and "international collaborative arrangements to enhance
supervision and enforcement of crypto asset regulations," the IMF
detailed.
Consensus on the Need to Develop and Apply Comprehensive Regulations
The executive board of directors "generally observed that
while the supposed potential benefits from crypto assets have yet to
materialize, significant risks have emerged," the IMF continued, adding:
"Directors generally agreed that crypto assets should not
be granted official currency or legal tender status to safeguard monetary
sovereignty and stability."
Moreover, "crypto assets have implications for policies
that lie at the core of the fund’s mandate," particularly their widespread
adoption, which "could undermine the effectiveness of the monetary policy,
circumvent capital flow management measures, and exacerbate fiscal risks,"
the directors warned.
The IMF further conveyed that its executive board of directors
"broadly agreed on the need to develop and apply comprehensive
regulations, including prudential regulation of crypto assets and effective
implementation of the FATF (Financial Action Task Force) standards." The
directors also stated that the IMF "should work closely to support the
regulatory work under the leadership and guidance of standard-setting
bodies."
While a few directors supported the idea that banning
cryptocurrency should not be ruled out, the IMF pointed out:
"Directors agreed that strict bans are not the best option
but that targeted restrictions could apply, depending on domestic policy
objectives and where authorities face capacity constraints."
Highlighting the importance of promoting the principle of
"same activity, same risk, same regulation," the directors said that
"strong coordination between authorities, both at the domestic and
international levels, is critical for consistent implementation and avoiding
regulatory arbitrage." They concluded that the IMF "could serve as a
thought leader in further analytical work on rapidly evolving developments in
crypto assets."
What is your take on the IMF executive board’s offer of guidance
for developing effective crypto policies? Please post your comments.
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