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IMF calls for a 'comprehensive, consistent, and coordinated' approach

Updated: Jul 25, 2024
Published: Dec 10, 2021
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International Monetary Fund, or simply IMF, has published a blog on cryptocurrency adoption in which it calls for a "comprehensive, consistent and coordinated" approach for cryptocurrency adoption on a global scale. The institution responsible for financial stability worldwide talked about three core elements of this adoption process. 

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IMF talks about the risks

In their published blog, the IMF talked about various risks that cryptocurrencies have and the way they can harm a nation's economy. These also include "operational and financial integrity risks from crypto-asset exchanges and wallets, investor protection, and inadequate reserves and inaccurate disclosure for some stablecoins."
"Importantly, many crypto service providers operate across borders, making the task for supervision and enforcement more difficult. Uncoordinated regulatory measures may facilitate potentially destabilizing capital flows," said the IMF blog. 
IMF believes that the efforts are not "sufficiently coordinate" to regulate cryptocurrencies on a global scale. As a result, "a global framework for managing the risks to financial and market integrity, financial stability, and consumer and investor protection" is needed.

Three steps to crypto adoption

The IMF talked about three steps to cryptocurrency adoption. The first step is to license all the cryptocurrency service providers, which would include the "storage, transfer, settlement, and custody of reserves and assets," the rules of which would be "similar to existing rules for financial service providers."
"Requirements should be tailored to the main use cases of crypto assets and stablecoins," cited the IMF as the second step.
The institution asked the central banks to coordinate with security regulators and, likewise, open communication channels for the same.

As the third and final step, the IMF said that "authorities should provide clear requirements on regulated financial institutions concerning their exposure to and engagement with crypto." 

Talking about cryptoization, the institution said that for some countries, these blockchain-based digital countries are a substitute to a failing fiat currency. As a result, "capital flow management measures will need to be fine-tuned in the face of cryptoization."

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