IMF Board Offers Guidance on Developing Effective Crypto Policies – Regulation of Bitcoin News

The Executive Board of the International Monetary Fund (IMF) has provided guidance for member countries to develop effective crypto policies. The board emphasized the need to develop comprehensive crypto regulations to “better mitigate the risks posed by crypto-assets while harnessing the potential benefits of the technological innovation.”

IMF Executive Board provides guidance on crypto regulation

The International Monetary Fund (IMF) on Thursday announced the outcome of a discussion held by its board members on a paper titled “Elements of Effective Policies for Crypto Assets.”

The IMF noted that the paper sets out a regulatory framework that “can help members develop a comprehensive, consistent and coordinated policy response” to crypto-assets:

By adopting the framework, policymakers can better mitigate the risks posed by crypto-assets while harnessing the potential benefits of the technological innovation associated with it.

The first element of the framework described by the IMF is to “ensure monetary sovereignty and stability by strengthening monetary policy frameworks and not giving crypto-assets official currency or legal tender status.”

Other elements include guarding against “excessive capital flow volatility,” enacting “unambiguous tax treatment of crypto-assets” and enforcing “prudential, conduct and oversight requirements for all crypto market participants.” The framework also establishes “a common monitoring framework across different national agencies and authorities” and “international cooperation arrangements to improve oversight and enforcement of crypto-asset regulations,” the IMF detailed.

The directors “generally observed that while the anticipated potential benefits from crypto-assets have yet to materialize, significant risks have emerged,” the IMF continued, adding:

Board members generally agreed that cryptoassets should not be given the status of official currency or legal tender to ensure monetary sovereignty and stability.

Moreover, “crypto-assets have policy implications that lie at the core of the fund’s mandate,” particularly their widespread adoption “could undermine the effectiveness of monetary policy, circumvent capital flow management measures and exacerbate fiscal risk,” the directors warned.

The IMF further conveyed that its executive board members “largely agreed on the need to develop and apply comprehensive regulations, including prudential and conduct 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 to support regulatory efforts under the leadership and guidance of standard-setting bodies.”

While a few directors believed that outright bans on cryptocurrency should not be ruled out, the IMF pointed out:

Board members agreed that strict bans are not the first best option, but that targeted restrictions may apply, depending on domestic policy goals and where authorities face capacity constraints.

Stressing the importance of promoting the principle of “same activity, same risk, same regulation,” the Directors stressed that “Strong coordination between authorities, both at the national and international levels, is essential for consistent implementation and to avoid regulatory arbitrage.” They concluded that the IMF “can serve as a thought leader in further analytical work on rapidly evolving developments in cryptoassets.”

What do you think of the IMF Board’s guidance for crypto policy development? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.