27 Feb 2023
Private cryptocurrencies need more regulation, according to IMF
According to Kristalina Georgieva, the IMF is not pushing for a complete ban on digital assets. But, more laws regarding private cryptocurrencies are wanted.
The International Monetary Fund is attempting to impose regulations on private cryptocurrencies, according to IMF Managing Director Kristalina Georgieva. She said this while addressing a crowd in Bengaluru, India before the G20 finance ministers gathered. The IMF does not want a complete ban on cryptocurrencies and other digital assets, Georgieva stated in an interview with Bloomberg. They do, however, want to classify and control digital currency. She described the current approach taken by the UN financial agency toward digital assets and its regulatory goals. She said,
“We are very much in favor of regulating the world of digital money. And this is a top priority.”
She responded to inquiries regarding a recent statement regarding a potential total ban on cryptocurrencies. According to the IMF director, that is unlikely to occur, and there is still a lot of uncertainty regarding how to classify digital currency. She then added;
“Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.”
Georgieva emphasized that fully-backed stablecoins give the cryptocurrency economy a respectable amount of room. The IMF director continued, “However, the unbacked crypto assets are speculative, high risk, and not money.”
Cryptocurrency assets cannot be used as legal tender
El Salvador officially became the first nation to recognize Bitcoin as a legal tender in June 2021. Georgieva argued that cryptocurrencies could not be used as legal tender because they lack backing. She added that if crypto-assets start to endanger the global financial system's stability, the option of outlawing them should not be completely ruled out. According to Georgieva, the best course of action would be to ensure better consumer protection, predictability, and regulations in the cryptocurrency industry.
Georgieva responded when asked what might result in a complete ban on cryptocurrencies: when industry players fail to protect consumers.
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