The International Monetary Fund (IMF) spoke of several impacts that the crypto market could have on the world’s economy in a global financial stability report. Giving particular importance to stablecoins, the organization called for global regulation standards for the market as a whole.
The International Monetary Fund (IMF) published its global financial stability report on Oct 12, stating that cryptocurrencies could threaten global financial stability. The IMF called for regulation of the market class and that this must be a “priority on the global policy agenda.” Furthermore, like the U.S. Treasury, it sees risks with stablecoins and calls this out as a key area of concern.
Some of the challenges that the IMF lays out are,
“Operational and financial integrity risks from crypto asset providers, investor protection risks for crypto assets and DeFi, and inadequate reserves and disclosure for some stablecoins.”
As for how to address these issues, the IMF says that global standards are required for crypto regulation to address any data gaps.
That recommendation is in line with what the Biden administration has said about crypto regulation, as it called for international cooperation on the matter. Of course, the IMF also calls for the issuance of central bank digital currencies (CBDCs), which is expected from the organization which has frequently criticized the crypto market.
Additionally, with respect to cryptocurrencies being touted as a means for developing nations to boost their economies, the IMF believes that this is a shortcut that carries significant risks. It alludes to El Salvador’s decision to make bitcoin legal tender, which has received both praise and criticism from the wider world.
The IMF, meanwhile, has stated that the decision could have adverse legal and macroeconomic effects, and warned against adopting crypto as legal tender. President Nayib Bukele and those in favor of making bitcoin legal tender say that it will drastically bring down costs of remittances — and the Bukele has already said that it exceeds expectations.
IMF not keen on crypto
The IMF’s views are in keeping with its past stance on crypto, where its opinion has mostly been the same. Namely, that cryptocurrencies could threaten national currencies and that it poses money laundering risks. In the report, it cites volatility, capital flows, and bank disintermediation as some of the risks — though market participants will cite the last example as being a plus point.
Perhaps the IMF has warmed up a little to the crypto market, however, as in this instance, it at least asks for some regulation on the market. Individual governments and regulatory bodies are also focusing on this matter, with the U.S. SEC taking up most of the headlines. How this will play out in the years to come is uncertain, but the market now stands to face some serious oversight from these entities.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.