The IMF strongly recommended against granting cryptocurrencies the status of official currency or legal tender, citing the need for stringent regulations.
In a report issued this month, the IMF argued that a comprehensive legal foundation – that would address both private law and financial law aspects – is essential to effectively regulating crypto.
It said that last year’s failures of the crypto trading platform FTX and the stablecoin Terra Luna highlighted the urgency of establishing clear policies to protect investors and prevent abuse, RT reported.
“Despite recent industry challenges, investor optimism continues to revive periodically, as evidenced by Bitcoin’s near doubling this year. Without robust safeguards, the increased risk of fraud and misconduct could adversely impact investors’ expected returns.”
The IMF stated that while some policymakers have taken necessary steps to safeguard consumers and ensure financial integrity, it is equally important to consider the broader implications of crypto.
Such assets, particularly stablecoins denominated in hard currencies, could potentially replace official currencies, and significantly impact the monetary and fiscal policies of countries, it warned. “This is especially true in emerging markets and developing economies, underscoring the need for a comprehensive, consistent, and coordinated policy approach to crypto,” the report added.