The International Monetary Fund (IMF), the financial institution focused on maintaining worldwide financial stability, has outlined its proposal for establishing a global regulatory framework for crypto.
- The IMF called for a “comprehensive, consistent and coordinated” approach in order to harness the benefits of crypto’s underlying technology while mitigating some of its risks, in a blog published on Thursday.
- This will prove a “daunting task…But if we start now, we can achieve the policy goal of maintaining financial stability while benefiting from the benefits that the underlying technological innovations bring.”
- According to the IMF, regulating crypto at a global level should have three core elements:
- Cryptoasset providers offering “critical functions,” such as storage, settlement and custody, need to be licensed.
- Requirements should be tailored to the main use cases of different crypto assets. As an example, investment products should be regulated in the same way as securities, payments services. They should have requirements similar to bank deposits, while also being overseen by a central bank.
- Financial institutions should be given clear guidelines for their crypto exposure, with regards to capital, liquidity, risk assessments etc.
- Last month, the IMF warned of the increasing use of crypto in the developing world — something it referred to as “cryptoization — which could destabilize economies and hamper central banks’ monetary policy.
Read more: BIS Experiment Finds CBDCs to Be Effective in Cross-Border Settlements
