The IMF put out a press release on Thursday detailing how it has discussed a paper on what it calls “Elements of Effective Policies for Crypto Assets”.
Doing nothing is untenable
The paper in question contains the questions of member countries of the IMF about the risks as well as benefits of crypto assets and how appropriate policy can be developed to respond to these concerns.
The IMF press release once more highlights the crypto exchange crashes and the actions of bad actors within the space.
“Efforts to put in place effective policies for crypto assets have become a key policy priority for authorities, amid the failure of various exchanges and other actors within the crypto ecosystem, as well as the collapse of certain crypto assets. Doing nothing is untenable as crypto assets may continue to evolve despite the current downturn.”
The last sentence says a lot about the psyche of the IMF and how it feels threatened by the growth of crypto. The use of “may continue to evolve” is interesting considering that crypto is almost certain to continue evolving. The sheer amount of development going on in the sector will make sure of this.
The press release goes on to list the “nine elements” that will need to be addressed in order to be able to put a comprehensive regulatory framework around crypto.
The first of these “policy actions” is also interesting in that it sees the need to “safeguard monetary sovereignty”, and requires that crypto assets are not granted official currency or legal tender status. Here it might have in mind El Salvador and other countries or regions that might be thinking of this.
In line with its anti-crypto stance the IMF stated in the paper that it:
“noted serious concerns about financial stability, financial integrity, legal risks, consumer protection, and market integrity.”
The IMF laid out its worries that the “widespread adoption of crypto assets could undermine the effectiveness of monetary policy” as well as many other ills.
In short, the IMF has realised that it needs a broad consensus among its members in order to be able to really assert far more pressure on crypto and to try and stop it in its tracks.
Wagging the finger at the El Salvadoran government and being told to mind its own business would not have gone down well with the IMF. Having the knowledge that Bitcoin and crypto could well go into a bull market this year, with the likelihood that many investors will want to be a part of this, will concern the IMF greatly.
When the crypto market is doing well, greater adoption is a given. The IMF will be certain to try and pull out all the stops in order to prevent the crypto train from leaving the station.
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