As cryptocurrencies stretch their presence to the layman’s reach, the concern for regulation over the burgeoning asset class is rising faster than ever. The International Monetary Fund Managing Director recently shared her take on cryptocurrency regulation. The Director spoke at finance ministers and central bank governors meeting in the wake of the G20 summit in Bengaluru, India.
IMF Director Kristalina Georgieva highlighted the efforts of financial authorities in order to regulate cryptocurrencies. She stated that the IMF is responsible for putting forth the crypto regulations, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS). This primarily includes the digital currencies, which fall under no authority of any country.
Georgieva said there is a need to consider the difference between central bank digital currencies (CBDCs) and stablecoins. CBDCs are the digital currencies with the backing of state’s authority while stablecoins are cryptocurrencies with values pegged to fiat currencies or commodities.
Further, she underlined the need for a “strong push for regulation.” According to her, if the regulation of cryptocurrencies fails or if it takes any longer to do so, then there should be an option for banning the crypto assets. She showed her concerns regarding the risks of financial instability given the cryptocurrencies.
As reported, the IMF chief attended a discussion with Indian Finance Minister, Nirmala Sitharaman prior to the statements over cryptocurrencies. The two had found the agreement on several subjects to treat as a priority, including restructuring debt and crypto regulations in the region.
India stands in a crucial position in terms of crypto users, as the country is estimated to have about 27 million people using the nascent assets. It is second after the United States of America itself, which is said to have 46 million crypto users.
Cryptocurrencies are not legal tender within the country until now. However, the lawmakers brought cryptocurrency trading and investment under the tax regime in February last year. According to legislation, the profits over the cryptocurrency investment or trading and transaction would incur a heavy tax of 30%. Many considered this a harsh move to discourage the usage of cryptocurrencies, while this was also looked at as monetizing the opportunity.
The calling for an outright ban on cryptocurrencies was not new in recent days from the international financial institution. Earlier, the executive board of the International Monetary Fund (IMF) provided some guidance related to crypto regulation which also mentioned a crypto ban.
The board had not directly gone for strictly banning the assets as “the first-best option,” most of them agreed to targeted restrictions. Though the board also kept the possibility of an outright ban. No country should officially grant crypto assets as legal tender ensuring “monetary sovereignty and stability.” The IMF chief reiterated somewhat the same while stating they should not be treated as legal tender as they are nothing.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/02/26/imf-director-consider-crypto-ban-as-an-option-if-needed-in-future/