The International Monetary Fund (IMF) has called for a “comprehensive, consistent and coordinated” approach to global digital currency regulations. Three officials at the global financial organization believe the cross-border and cross-sector nature of digital currencies renders national regulatory approaches ineffective. Financial regulators across countries are actively working on crypto regulations. Earlier, India’s central government announced to introduce a crypto regulations bill in the parliament soon.
IMF delves into the risks that cryptocurrencies pose to the financial industry.
Dong He, Aditya Narain, and Tobias Adrian all hold executive positions at the IMF’s Monetary and Capital Markets Department. A recent blog post delved into the risks they believe digital currencies pose to the financial industry and how unified regulations could overcome most of these risks. The three executives identified determining valuation as one of the key challenges with digital currencies. Others include identifying, monitoring, and managing risks such as financial integrity risks for exchanges and wallets. Lack of investor protection and inaccurate disclosure for some stablecoins also pose challenges that ‘defy regulators.’
The IMF believes the solution lies in a unified regulatory approach.
The IMF executives believe the solution lies in a unified regulatory approach. They think that the Financial Stability Board (FSB) should develop a global framework comprising standards for digital currencies. “The objective should be to provide a comprehensive and coordinated approach to managing risks to financial stability and market conduct that can be consistently applied across jurisdictions while minimizing the potential for regulatory arbitrage or moving activity to jurisdictions with easier requirements,” the executives noted in the blog post. Currently, most countries are working on their own isolated national regulatory approaches. However, with digital currencies being cross-border and cross-sector, the IMF believes that such approaches are unlikely to be comprehensive.