Crypto regulation must be global, not national

The fast development of crypto assets, related products and services, and the interlinkages with the regulated financial system are heightening the requirement for worldwide crypto regulation that ought to be thorough, predictable and composed by the world’s controllers, as per a new paper delivered by the International Monetary Fund (IMF). The analysis was created by Tobias Adrian, Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department, Dong He, Deputy Director of the Monetary and Capital Markets (MCM) Department of the IMF, and Aditya Narain, Deputy Director of the MCM Department. The three authors contended that awkward regulatory measures could facilitate potentially destabilizing capital flows across the world.

They stated that, “While the nearly 2.5 trillion market capitalization indicates significant economic value of the underlying technological innovations such as the blockchain, it might also reflect froth in an environment of stretched valuations. Indeed, early reactions to the Omicron variant included a significant crypto selloff.”

According to the paper published on the website of the Washington-based international financial institution: “Policymakers struggle to monitor risks from this evolving sector, in which many activities are unregulated. In fact, we think these financial stability risks could soon become systemic in some countries.”

The authors justify the need for global crypto regulation with their observation that cryptocurrencies’ “cross-sector and cross-border remit limits the effectiveness of national approaches.”

The proposed global regulatory framework should ensure a level playing field along the activity and risk spectrum, said the post, and include the following three elements:

Additionally, they said that supervision and enforcement are made more difficult by the fact that many crypto service providers operate across borders-

The paper concluded that there is “an urgent need for cross-border collaboration and cooperation to address the technological, legal, regulatory, and supervisory challenges,” and adding that it is a daunting task to set up “a comprehensive, consistent, and coordinated regulatory approach to crypto.”

“But if we start now, we can achieve the policy goal of maintaining financial stability while benefiting from the benefits that the underlying technological innovations bring,” the authors stated.

News Summary:

• Crypto regulation must be global, not national
• Check all news and articles from the latest Business news updates.