The IMF chief economist opposes the cryptocurrency ban and wants the sector to be regulated.
The chief economist of the International Monetary Fund, Gita Gopinath, expressed her opposition to the blanket ban on cryptocurrencies but instead wants the sector to get its proper regulation.
In this regard, Gopinath has called for the immediate enactment of standard global policies to regulate digital assets, reports Business Today.
At an event organized by the National Council for Applied Economic Research (NCAER), Gopinath highlighted that cryptocurrencies are a challenge for new markets and that strict regulation is the need of the moment. She called for an urgent global policy on the issue.
The representative stressed that developing economies should regulate cryptocurrencies rather than ban them. Gopinath, however, added that there are practical downsides to banning digital currencies, given their decentralized nature.
The official explained that regulating crypto assets and cryptocurrencies is essential, especially for emerging and developing economies. The ban may not work as crypto exchanges get located abroad, making it easier for an individual to exchange them despite the ban.
Union of Countries
The official claimed that no single country could solve this problem on its own, considering the complicated cross-border transactions.
Gopinath added that Cryptocurrencies pose problems, as emerging developing economies often have exchange rate controls, capital controls, and capital flow measures. Crypto assets can serve as tools to evade those regulations.
For her, cryptocurrencies require the revision of most laws, especially those related to foreign transactions. Gopinath will take over as the IMF’s first deputy managing director on January 21, 2022.
Gopinath was the author of an IMF article at the beginning of the pandemic, where she stated that the economic crisis would be the worst after the Great Depression of 1929. She titled the situation with a very appropriate name: “The Great Confinement,” since this has been the measure taken in almost all countries.
IMF and its Crypto Policies
Gopinath’s words precede a series of guidelines released by the IMF this week on a proposed framework for making a global crypto regulation standard.
Before that, the IMF has insisted on the need to set rules for the crypto market. To do this, the IMF has been meeting with the World Bank, the Bank for International Settlements, and the Group of 20 to establish common official standards.
The IMF looks at how cryptocurrencies should get regulated. The global regulatory framework should provide a level playing field across the spectrum of activities and risks, the authors stated, listing three elements that should get included.
Crypto service providers, including those that offer storage, transfer, settlement, and custody of reserves and assets, must be licensed or authorized.
The publication adds: “The requirements must get adapted to the main use cases of crypto assets and stable coins.” In addition, regulators “must coordinate to address the various risks arising from different and changing uses,” including central banks and securities regulators.
Authorities must provide clear requirements to regulated financial institutions regarding their exposure and commitment to cryptocurrencies.” Likewise, the IMF has been one of the most critical organizations of El Salvador after that country converted Bitcoin into legal tender.
By: Jenson Nuñez
