The International Monetary Fund prefers to differentiate and regulate crypto assets rather than enforcing an outright ban, but the nuclear option remains on the table for now.
On the sidelines of the G20 Finance Ministers’ Meeting in Bengaluru, India, IMF Managing Director Kristalina Georieva explained how UN financial institutions view digital assets and what they want in terms of regulation. .
“We are very much in favor of regulating the world of digital money,” she said. This is our top priority.
inside interview On Bloomberg, published Feb. 27, she answered questions about recent comments about the possibility of a complete ban on cryptocurrencies. She said there is still a lot of confusion about the classification of digital money.
“Our first objective is to distinguish between state-backed central bank digital currencies and publicly issued cryptoassets and stablecoins.”
Fully backed stablecoins create “reasonably good space for the economy,” but unbacked crypto assets are speculative, risky and not money, she added.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva says ‘more regulation is needed’ https://t.co/TMq6eWWwwf
— Bloomberg Crypto (@crypto) February 25, 2023
Citing a recent paper recommending global regulatory standards, she said crypto assets cannot be legal tender because they are unbacked.
However, she warned that the option of banning cryptocurrencies “should not be left out of consideration” if they begin to pose significant risks to financial stability.
Nonetheless, proper regulation, predictability and consumer protection would be the better option, Georgieva said, and would not need to consider a ban.
Related: IMF Executive Board Supports Crypto Policy Framework, Including No Crypto as Legal Tender
When asked what would drive the decision to ban cryptocurrencies, she said the failure to protect consumers from the rapidly evolving world of cryptocurrencies would be the main catalyst.
The IMF, Financial Stability Board and Bank for International Settlements (BIS) are jointly preparing regulatory framework guidelines to be released in the second half of this year.