The International Monetary Fund (IMF) has issued a call for a coordinated global policy framework on cryptocurrency and uniform standards. Is this possible at all?
What the IMF suggests
The IMF representatives note a rapid growth of the digital currency industry; according to them, growing risks from this evolving sector require a unified approach to regulating the crypto market, which countries need to work out collectively.
The IMF insists that the world needs comprehensive international standards to address risks from crypto assets alongside an enabling environment for useful crypto products and applications. Regulators in different countries need to collaborate to address the technological, legal, regulatory, and supervisory challenges. A consistent and coordinated regulatory approach to crypto will help maintain financial stability while the global financial system will benefit from exposure to digital assets.
Not the first call
The IMF is not the first organization to call for global crypto market regulation. Earlier, ECB leader Christine Lagarde urged national regulators to implement global rules for crypto, which she sees as an “extremely speculative asset.”
On a practical level, the Financial Action Task Force (FATF), the global anti-money laundering watchdog, has been working on a common framework for some time. In 2019, the FATF introduced a number of rules for crypto exchanges to prevent money laundering and financing of terrorism. Although the rules are not binding, the member countries might lose foreign investment if they choose to ignore them. In October 2021, the FATF released its Updated Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers.
International organizations have repeatedly called on countries to work out uniform rules. Although the global rules have not been fully implemented yet, the crypto market is gradually moving towards regulation the same way as conventional financial markets. It is definitely going to be a long process — and yet quite feasible.
Regulation will increase the crypto market’s transparency and make it more attractive to institutional investors, which will bring in additional liquidity.
By Dmitry Noskov, expert at StormGain cryptocurrency trading platform