The International Monetary Fund would rather regulate cryptocurrencies than ban them outright
The IMF would prefer to differentiate and regulate crypto assets rather than ban them outright, but the ban option will remain on the table for the time being.
Speaking on the sidelines of the G20 Finance Ministers’ Meeting in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained how the UN financial agency views digital assets and what it would like to see in terms of regulation.
“We are very much in favor of regulating the world of digital money,” she said, and this is a top priority for us.
During her interview with Bloomberg, which was published on February 27, she answered a question about her recent comments about a potential full ban on cryptocurrencies, and noted that there is still a lot of confusion about the classification of digital money, saying:
“Our first goal is to distinguish between state-backed central bank digital currencies, publicly issued crypto assets, and stable currencies.”
She added that fully backed stablecoins create “reasonably good space for the economy,” but that unbacked crypto assets are speculative and high-risk and not money.
“There has to be more regulation,” IMF Managing Director Kristalina Georgieva says https://t.co/TMq6eWWwwf
— Bloomberg Crypto (@crypto) February 25, 2023
Furthermore, the IMF Managing Director cited a recent research paper recommending global standards of regulation, and said that crypto assets cannot be legal tender because they are not backed.
It also warned that the option to ban cryptocurrencies “should not be taken off the table” if cryptocurrencies begin to pose a greater risk to financial stability.
However, Georgieva stated that the best option for them is good regulation, consumer protection and predictability, and there is no need to consider a ban.
Related: IMF exec board endorses crypto policy framework, including no crypto as legal tender
When asked what could cause cryptocurrencies to be banned, she replied that the primary catalyst would be the inability to protect consumers from the rapidly evolving world of crypto assets.
The International Monetary Fund, the Financial Stability Board and the Bank for International Settlements are jointly preparing to issue guidelines for the regulatory framework in the second half of the year.