IMF Says Adoption of Crypto Could Undermine Political Power, Urges ‘Global Standards’
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The International Monetary Fund (IMF) is warning against the dangers of unregulated crypto in a newly released report.
In the new Global Financial Stability Report, the IMF suggests that domestic policymakers should develop globally-minded regulations of the disruptive but growing blockchain financial sectors, like decentralized finance (DeFi) and fintech.
“Policymakers should develop comprehensive global standards for crypto assets along the activity and risk spectrum. A more robust oversight of fintech firms and decentralized finance (DeFi) platforms is needed to take advantage of their benefits while mitigating their risks.”
The IMF argues that developing international and nuanced standards for the crypto markets is key to maintaining capital flow management effectiveness.
“To preserve the effectiveness of capital flow management measures in an environment of growing usage of crypto assets, policymakers need to pursue a multifaceted policy strategy. Recent measures taken in markets and exchanges in response to elevated volatility in commodity prices highlight the need for regulators to examine the broader implications, including exchange governance mechanisms, resiliency of trading systems, concentration of risk, margin setting, and trading transparency in exchange and over-the-counter markets.”
The report also warns that unregulated crypto could undercut domestic policy plans for certain countries. The IMF urges international cooperation for setting crypto standards.
“In addition, more widespread use of crypto assets in emerging markets could undermine domestic policy objectives. Multilateral cooperation will remain key to overcome these medium-term challenges.”
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