The International Monetary Fund (IMF) has called for a global, uniform framework for crypto regulation.
It recommended the change in its Global Financial Stability Report to its 190 member countries.
The six-monthly dossier devotes a chapter to cryptocurrency pros, cons, and regulations entitled “The Crypto Ecosystem and Financial Stability Challenges”.
Rather than the fractured and disjointed rules that currently exist for crypto regulation, the IMF report paints a picture of a global rule book that sees consumer protection at the top of its agenda.
The cryptocurrency ecosystem has developed quickly in a short period of time. The entire market capitalisation surpassed $2tn in September – a ten-fold increase from the start of 2020. Meanwhile, the mass development of wallets, mining pools and miners, stablecoin issuers, and exchanges has spawned a huge sub-economy.
This poses a problem in the eyes of international financial watchdogs like the IMF which estimates there have been somewhere in the region of 16,000 different kinds of tokens over the last decade or so. Almost 7,000 no longer exist.
Another issue highlighted in the report is the IMF’s concern that anonymity is fostering an ability for criminal gangs and terrorists to fund their activities.
The report also looks unfavourably on stablecoins which, the IMF warns, have the potential to experience runs due to the coins they hold in reserve. The report recommends stablecoins should receive similar regulation to money market funds (MMFs).
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.