IMF calls for coordinated action over fears crypto could undermine global monetary system

The International Monetary Fund took a seemingly tough stance toward growing crypto adaptation with a set of recommendations for member countries and a call for a “coordinated response.”

“The widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks,” the organization said in a statement, referencing a discussion about crypto policies its executive board had earlier this month.

“Directors generally observed that while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged,” the IMF said, arguing that crypto should not be granted official currency or legal tender status. While the directors agreed that “strict bans are not the first-best option,” “a few directors, however, thought that outright bans should not be ruled out.”

The IMF cited concerns it had about the impact of crypto on financial stability, financial integrity, legal risks, consumer protection and market integrity. It discussed a framework of nine elements that could help member countries “develop a comprehensive, consistent, and coordinated policy response,” with recommendations including the adaptation of “unambiguous tax treatment of crypto assets.”

The organization also said that member countries could mitigate risks posed by crypto by working to strengthen digital infrastructure and “alternative solutions” for cross-border payments and finance.

“Directors noted that regulation should be mindful not to stifle innovation, and the public sector could leverage some of the underlying technologies of crypto assets for their public policy objectives,” the IMF said.