The International Monetary Fund (IMF) warned of “systemic” risks to financial stability from the burgeoning cryptocurrency sector and called for “comprehensive, consistent and coordinated” regulation of the industry.
Crypto ‘$ 2.5 trillion market value shows the significance of innovations like blockchain — and reflects that it’s overvalued. Our #IMFBlog How regulation can safeguard financial stability. https://t.co/ZIZ6ggxuIu pic.twitter.com/tB1wVizCrV
– IMF (@IMFNews) December 9, 2021
“While a market capitalization of nearly $ 2.5 trillion indicates significant economic value for foundational technological innovations like blockchain, it could also indicate a bubble in an overvalued environment. Indeed, the early reaction to the omicron strain included a significant sell-off in the cryptocurrency market, ”reads a December 9 article.
The IMF experts noted the need to create international standards for regulating the digital asset industry in order to eliminate the associated risks. They also recommended developing “an enabling environment for useful cryptocurrency-based products and applications.”
The authors of the article believe that providers of digital asset services should be licensed or authorized, and investment-oriented products should be distinguished from payment ones. The former, in their opinion, should be regulated as securities, while the latter should be subject to the supervision of central banks or bodies responsible for the payments sector.
The IMF highlighted the risks of “cryptoization” of emerging markets and economies, where digital assets “replace the national currency.” Experts also noted that the international nature of projects in this area makes regulation and control difficult.
Earlier, the IMF warned about the “risks of contamination” of the global economy due to stablecoins.
In November, the institution called for increased regulation of cryptocurrencies as the industry’s growth “poses a number of risks and challenges to financial stability.”
Recall that in the same month, the IMF re-criticized El Salvador for the decision to recognize bitcoin as the official currency.
Subscribe to Cryplogger news on Telegram: Cryplogger Feed – the entire news feed, Cryplogger – the most important news, infographics and opinions.
Found a mistake in the text? Select it and press CTRL + ENTER
