While some states are fighting the adoption of cryptocurrencies, two IMF (International Monetary Fund) executives believe that the best thing is to provide the sector with a uniform global regulation. For them, there is a need to both bring order to the market and adopt a framework conducive to innovation.
Crypto is now part of our daily lives and these IMF executives know it
Aditya Narain, deputy director of the International Monetary Fund’s Money and Capital Markets Department and his second in command, Marina Moretti, have in an op-ed, made public their position on cryptocurrencies. The two senior IMF officials are against the idea of banning cryptocurrency but call for “global regulation”.
For Aditya Narain and Marina Moretti, cryptocurrencies have grown by leaps and bounds in just a few years. They claim that digital assets have gone from being investments to being safe havens and means of payment.
On the other hand, the two IMF experts believe that regulation has lagged seriously behind the development of a sector “that can no longer be continuously ignored” because of its impact on the entire economy.
Cryptoassets have been around for more than a decade, but it’s only now that efforts to regulate them have moved to the top of the political agenda. That’s partly because it’s only in the last few years that they’ve gone from being a speculative niche product, to a safe haven and payment method.Aditya Narain and Marina Moretti, IMF Executive
Contrasting and ineffective national regulations
They also point out that regulatory efforts are being made at the level of each country. While some states like Switzerland and Japan have introduced clear legislation of the crypto sector, others on the other hand, like Nigeria fiercely fight the use of digital assets.
Overall, the authorities in each country have taken very different approaches on the regulatory policy of the crypto sector. This regulatory contrast is causing investors to move to more open states without actually compromising the ability of citizens in repressive states to access cryptocurrency.
On the one hand, authorities have banned the issuance or holding of cryptoassets by residents or the ability to use them for transactions or payments. On the other, some countries have been much more welcoming and have even sought to court businesses to develop markets in these assets. The resulting fragmented global response does not ensure a level playing field or protect against a race to the bottom as crypto players migrate to the most user-friendly jurisdictions with the least regulatory rigor, while remaining accessible to anyone with internet access.”Aditya Narain and Marina Moretti, IMF Executive
Global regulation of cryptocurrency is a necessity according to the IMF
With the meteoric growth of the cryptocurrency industry and the emergence of differing national regulatory frameworks, Aditya Narain and Marina Moretti call for coordinated, consistent and comprehensive regulation on a global scale. Such regulation should ensure a level playing field across countries. It should also effectively address all players and aspects of the crypto ecosystem.
The IMF calls for a global response that is (1) coordinated, so that it can close regulatory gaps that arise from inherently cross-sector and cross-border issuance and ensure a level playing field; (2) consistent, so that it aligns with current regulatory approaches across the spectrum of activities and risks; and (3) comprehensive, so that it covers all players and all aspects of the crypto ecosystem.Aditya Narain and Marina Moretti, IMF Executive
The International Monetary Fund had previously been very hostile to the development of cryptocurrencies. The op-ed by two of its executives calling for regulation, not repression, of cryptocurrency marks a sudden reversal of fortunes that proves that the narrative on cryptocurrencies within institutions is evolving in a positive way.
Until the regulatory framework desired by Aditya Narain and Marina Moretti is put in place, crypto-friendly countries like the United Arab Emirates are taking full advantage of the crypto market. As for the more hostile ones, they are not actually able to stop the crypto wave. In Nigeria, for example, faced with a ban on exchange platforms, users are turning to P2P infrastructures. Despite the hostility of the local government, the country is still at the forefront of crypto adoption in Africa.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.