The International Monetary Fund (IMF) is calling for sweeping and synchronized crypto regulations across the globe.
In a new blog post, IMF officials warn that the nearly $2.5 trillion crypto market is becoming more interlinked with the traditional financial system and could pose systemic financial stability risks in certain countries.
“Some emerging markets and developing economies face more immediate and acute risks of currency substitution through crypto assets, the so-called cryptoization.
Capital flow management measures will need to be fine-tuned in the face of cryptoization.”
The IMF officials also says that the crypto market’s cross-border nature makes uncoordinated nationalized regulations ineffective.
“Uncoordinated regulatory measures may facilitate potentially destabilizing capital flows.”
The officials argue that crypto asset service providers need to be licensed and that regulatory requirements should be tailored to the different use cases of crypto projects.
“For example, services and products for investments should have requirements similar to those of securities brokers and dealers, overseen by the securities regulator.
Services and products for payments should have requirements similar to those of bank deposits, overseen by the central bank or the payments oversight authority.”
The IMF also calls for clear requirements for regulated financial institutions that put limits on exposure to crypto assets.
The IMF has previously published blog posts arguing that crypto poses risks to consumer protection and the banking sector.
Read the IMF’s full blog post here.
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxFeatured Image: Shutterstock/klyaksun/Andy Chipus