Crypto no longer a niche product? Here’s what the IMF says
The International Monetary Fund (IMF) has released a new research report on cryptocurrency. The report stated that cryptocurrencies are no longer “niche products”. Furthermore, regulators need to coordinate to introduce an effective way to regulate cryptocurrencies in the market.
The report was co-authored by Marina Moretti and Aditya Narain, Assistant Director and Director of the IMF’s Monetary and Capital Markets Department. It further stated that if national authorities took longer to respond to cryptocurrencies, the possibility of misleading regulations could arise.
Such regulations may not help any country. And it can even harm consumers in different settings. The authors of the report said,
“A global regulatory framework will bring order to the markets, help create consumer confidence, set the limits of what is permitted, and provide a safe space for useful innovation.”
Niche product?
The IMF claimed that digital assets are mainstream items now. Due to their increased popularity, the crypto industry now needs to have strict regulations in place.
The issuance or possession of crypto-assets has been prohibited by certain authorities. Others have tried to sentence sector participants with more lenient regulations.
The failures of recent cryptocurrency exchanges, hedge funds and issuers have “put pressure on the demand for regulation,” the authors wrote.
However, developing a regulatory framework for cryptoassets is a difficult task, argue Narain and Moretti.
In addition, the authors have called for a coordinated, unified and comprehensive international framework for cryptocurrencies. They also criticized regional governments’ divergent approaches to crypto regulation.
Global regulations
Commenting on the global regulatory framework, Narian and Moretti stated that irregularities in the crypto space have led to regulatory difficulties.
They further specified that some authorities may prioritize financial integrity, security and consumer protection. Traditional financial rules do not apply easily to most miners, validators and protocol developers working with digital assets.
A worldwide framework would bring order to the markets, the paper continued. In addition, it will serve to establish consumer trust, set limits on what is permitted, and provide a safe environment for innovation.
