IMF official sees fundamental conflict between banking and crypto

In a recent interview, Tobias Adrian, Director of Money and Capital Markets at the IMF, argued a fundamental conflict between conventional banking regulatory techniques and the crypto sector.

Adrian noted that institutions must be able to ensure that what is happening is legitimate. However, he believed that in a world where transactions are essentially anonymous, that is challenging to achieve.”

The official added: “And so there is a fundamental clash between traditional banking regulatory approaches and the crypto world.”

IMF director unsure that a crypto spring will follow winter

The IMF director told Yahoo Finance that several of the existing schemes in crypto have become ineffective. Adrian said: “Winter means it’s spring and summer one day. But it’s not entirely clear that we’re going to go back to the kind of valuations that we saw in the past, is it?”

By the end of the month, according to cryptocurrency supporter Michael Novogratz, there is a high probability that Bitcoin can reach $30,000 again.

Meanwhile, the official also referred to the Fed’s decision to reject crypto bank Custodia’s application. He said it ensures banks’ risk exposure is limited. Especially when the risks are very challenging to manage, the official said.

As for the wider regulatory space, Adrian said,

“I mean, it’s a concerted effort by regulators around the world led by the FSB, the Financial Stability Board, which is also housed in Basel to have a comprehensive, coordinated and coherent regulation of crypto around the world.”

Meaningful sectoral policy in the US

In a statement on El Salvador’s economy last week, the International Monetary Fund (IMF) left the country for the choice to make Bitcoin legal tender. Meanwhile, the US needs help enforcing crypto laws more quickly.

Adrian believes that the crypto sector has very little oversight and investor protection. He stated: “There are very few assurances about how a client’s assets are handled.”

Meanwhile, all-encompassing crypto regulations and laws for stablecoins have run into parliamentary roadblocks in Congress since 2022.

The sector is far from making meaningful policy decisions thanks to the first legislative session in 2023. The session, which ended this week, revealed a political party split over how to regulate the sector.