IMF states that crypto regulation needs to become a priority since crypto assets are now mainstream
In a recent report, IMF directors discuss crypto markets and why countries seem to be struggling with regulating their crypto economy
By Shashank Bhardwaj
Crypto assets have moved from being niche products for a particular group of people to having a mainstream presence. The International Monetary Fund (IMF) says that this calls for the need for more comprehensive and well-rounded regulation measures around the crypto sphere.
In a report authored by Aditya Narain, IMF capital markets director, and Marina Moretti, assistant director, they said that crypto assets are no longer “niche products”, and are now used for speculative investments, act as hedges against weaker currencies and are also payment instruments.
They further stated, “the failures of crypto issuers, exchanges and hedge funds have added impetus to the push to regulate these digital assets.”
Narain and Moretti have acknowledged that developing regulatory frameworks is as difficult as it sounds due to the rapidly changing nature of the markets, as well as the difficulty in monitoring and the absence of workable skills of regulators. They said, “Regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities.”
In the report, which was released on September 5, the authors also called out the inconsistent approach many regulators are taking for crypto regulation. They advocated for a coordinated and consistent effort to form a comprehensive global crypto regulatory framework. Narain and Moretti wrote,“Some regulators may prioritize consumer protection, others safety and soundness or financial integrity. And there is a range of crypto actors — miners, validators, protocol developers — that are not easily covered by traditional financial regulation.” Further in the report, they continued, “A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.”
In the wake of the rise of crypto, regulators have put crypto regulation at the top of their meeting agendas. In Europe, the final legal text for the Markets in Crypto-Assets (MiCA) regulations are waiting to be released in the upcoming weeks. Across the pond to them in the United States, a crypto regulation bill called the Responsible Financial Innovation Act is set to address and discuss some of the biggest challenges facing the digital assets sphere.
Skeptics who had earlier called for widespread crypto bans also seem to be coming around with the idea of regulation, with US congressman Brad Sherman changing his stance and saying that banning crypto is not a viable option now.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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