Since crypto is no longer a niche, the IMF wants regulators to step up
Cryptocurrencies are no longer “niche products,” according to the International Monetary Fund, and regulators must coordinate a meaningful global response, the agency said in a new report.
The report, authored by Aditya Narain, deputy director of the IMF’s monetary and capital markets department, and Marina Moretti, assistant director of the department, said the longer it takes for national authorities to coordinate a response to crypto, the more likely it is. is for regulations to be adopted elsewhere and applied in ways that do not help, or even harm, consumers in different environments.
“A global regulatory framework would bring order to markets, help instill consumer confidence, set limits on what is permissible, and provide a safe space for useful innovation,” write the authors.
While some authorities have taken more extreme measures, such as banning the issuance or holding of crypto-assets, others have tried to woo industry players with softer rules.
“The resulting fragmented global response neither ensures a level playing field nor protects against a race to the bottom as crypto actors migrate to the friendliest jurisdictions with the least regulatory stringency – while remaining accessible to anyone with internet access,” the United Nations agency report continues.
In the earlier days of the crypto era, regulators seemed most concerned with preventing transactions related to money laundering or other illegal activities, but recently, the report notes, those concerns have changed as cryptocurrencies have developed a “mainstream presence as speculative investments, hedges against weak currencies , and potential payment instruments.”
Regulators have struggled to keep up as cryptocurrencies have evolved. It has proven difficult for agencies to recruit personnel with domain expertise, especially as budgets have been stretched and priorities have been juggled or unclear. But, as mentioned in the report, the need for proper, comprehensive regulation has never been stronger.
“Some regulators may prioritize consumer protection, others safety and solvency or financial integrity,” write the report’s authors. “And there are a number of crypto actors – miners, validators, protocol developers – that are not easily covered by traditional financial regulation.”
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