• International Monetary Fund (IMF) Managing Director Kristalina Georgieva says crypto needs „more regulation“.
• IMF’s Chief Calls for More Crypto Regulation, suggesting that banning should be an option if regulation fails or is too slow to implement.
• The IMF executive board provided guidance this week to help countries develop effective crypto policies.
IMF Calls for ‚More‘ Crypto Regulation
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has called for more regulation of cryptocurrencies, noting that banning them should not be ruled out if regulations fail or are too slow to implement. Her statement was made during a roundtable discussion she co-chaired with Indian Finance Minister Nirmala Sitharaman on the sidelines of G20 meetings for finance ministers and central bank governors under India’s presidency in Bengaluru.
Differentiating Between CBDCs and Stablecoins
Georgieva explained that the IMF, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS) are committed to establishing a foundation for the regulation of cryptocurrencies that are not issued by governments or central banks. She highlighted the need to differentiate between central bank digital currencies (CBDCs) that are backed by states and stablecoins, as well as privately issued crypto assets.
The Need For Regulation
Georgieva emphasized the necessity of strong push for regulation in order to prevent financial stability risk caused by unregulated crypto assets. She added that outright bans should not be ruled out if necessary. This sentiment was echoed by the recent guidance provided by the IMF executive board which advised against granting official currency or legal tender status to crypto assets in order to safeguard monetary sovereignty and stability.
El Salvador Adopting Bitcoin as Legal Tender
The IMF has been against El Salvador accepting bitcoin as legal tender since they made it their national currency back in September 2021. Despite this opposition, earlier this month, it was reported that so far, no risks have materialized from El Salvador adopting BTC as legal tender.
It is clear from these recent developments that there is a growing consensus amongst global regulatory bodies regarding crypto regulation – stronger regulations need to be put into place in order to protect investors and prevent financial instability risks caused by unregulated crypto assets such as stablecoins and privately issued tokens. However, bans should not be ruled out completely if needed.