According to the International Monetary Fund, the crypto space harbors one thing above all: risks to the traditional financial sector. In the latest blog post, the IMF calls for extensive regulations for crypto assets.
For him International Monetary Fund (IMF) was probably going too fast when it comes to cryptocurrencies. El Salvador not only implemented Bitcoin (BTC) as legal tender, but also announced the search for a suitable Bitcoin city. It is said to be at the foot of a volcano, powered by the nearby geothermal power plant to mine new coins.
However, the IMF sees this primarily as a threat to the international financial sector and warns of the volatility of crypto assets. In a blog post dated December 9, the organization called for “comprehensive, consistent and coordinated” global crypto regulation. The IMF explains that the total market capitalization of the US $ 2.5 trillion crypto market could not only reflect the economic value of blockchain technology, but also the “overpriced” of digital assets.
Crypto Risks for the Global Financial System
But not only the determination of the value of digital assets is problematic according to the IMF. In the crypto ecosystem, “identifying, monitoring and managing risks would also challenge regulators and businesses,” according to the IMF. Consequently, the IMF calls for “comprehensive international standards that take into account risks to the financial system … more comprehensively,” the organization writes. However, there should be “at the same time a favorable environment for useful crypto-asset applications and products.”
Above all, the usability of cryptocurrencies across sectors and national borders would limit the “effectiveness of national approaches” in the respective countries.
When it comes to regulation, the IMF asks for three main things. Crypto asset providers must be licensed or authorized and authorities must establish clear requirements for regulated financial institutions regarding their crypto stake. Also, the requirements for the respective assets should be based on the main use cases. This means that the regulations of the assets to be used for payments must, for example, adhere to the regulations in the area of bank deposits.