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Crypto as Legal Tender a Red Flag as International Monetary Fund Backs Restrictions

2 mins
23 February 2023, 20:24 GMT+0000
Updated by Ryan James
23 February 2023, 20:24 GMT+0000
In Brief
  • On Thursday, the IMF suggested that cryptocurrencies should not be used for legal tender.
  • Legal tender would mean that businesses are legally obligated to accept a certain cryptocurrency as a means of payment.
  • In other news, Timothy Massad, former chairman of the Commodity Futures Trading Commission (CFTC), has said there needs to be clearer rules on staking following the crackdown on Kraken.
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On Thursday, the IMF sent a worrying signal to the ecosystem that cryptocurrencies should not be “legal tender.”

On Thursday, the Executive Board of the International Monetary Fund (IMF) released a statement stating that cryptocurrency — in general — should not be given legal tender status. 

Legal tender would mean that businesses are legally obligated to accept a certain cryptocurrency as a means of payment.

The board is made up of 24 directors who were elected by the IMF’s member countries. Earlier this month, they had been presented with a staff paper that highlighted the dangers of crypto to monetary policy, financial stability, tax collection, and consumer protection. 

Members of the International Monetary and Financial Committee listen to the Chairman and Egyptian Finance Minister Youssef Bourtos-Ghali as they meet October 9, 2010 at the IMF Headquarters in Washington, DC.
The IMF has suggested that cryptocurrencies should not be legal tender. Source: IMF

The statement affirmed that crypto assets should not be official currency or legal tender to preserve monetary sovereignty and stability. The statement further called for countries to specify their tax treatment and conform to global standards.

The IMF is an international organization that promotes global monetary cooperation, trade, economic growth, and poverty reduction. It is one of the most important bodies in the global economy.

The news is the latest blow to an industry that has come under increased scrutiny since the collapse of FTX.

SEC Must Clarify Staking Rules, Says Former CFTC Chair 

Earlier this month, the SEC closed down Kraken’s staking programs for U.S. investors. The agency viewed it as a victory for investors. 

However, it remains uncertain whether the SEC’s enforcement action against Kraken represents a broader crackdown on staking, according to Timothy Massad, a former chairman of the Commodity Futures Trading Commission (CFTC).

“The Kraken case, just given its terms, was very much clearly solicitation of an investment and falls within the definition of an investment contract, so the facts make it clear why the SEC took its action,” Massad told Forkast.

Binance Australia Allegedly Terminates Accounts and Positions for Some Traders

On Feb. 23, Binance Australia’s Derivatives users received abrupt notifications stating that certain derivatives positions and accounts would be closed. 

Users who were not classified as “wholesale investors” were informed that all their positions would be closed. To continue using the platform, users were instructed to provide evidence to meet the “wholesale investor” criteria. Binance Australia Derivatives is reportedly working on remediation and compensation for users owed refunds due to the changes. 

The platform stated that the account closures were in compliance with local regulations in Australia, and affected users were immediately contacted.


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