The International Monetary Fund (IMF) released a new research report on cryptocurrencies. The report stated that cryptocurrencies are no longer “niche products.” Furthermore, regulators must coordinate to introduce an efficient way to regulate cryptocurrencies in the market.
The report was co-authored by Marina Moretti and Aditya Narain, assistant director, and director at IMF’s Monetary and Capital Markets Department. It further stated if national authorities took longer to respond to cryptocurrencies, the possibility of misleading regulations may pop up.
Such regulations may not be of help to any country. And, it can even harm consumers in various settings. The authors of the report stated,
“A global regulatory framework will bring order to the markets, help instil consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation.”
IMF claimed that digital assets are mainstream items now. Due to their increased popularity, the crypto industry now needs to have stringent regulations in place.
The issuance or possession of crypto assets has been outlawed by certain governments. Others have attempted to court sector participants with more lenient regulations.
The failures of recent cryptocurrency exchanges, hedge funds, and issuers have “added pressure to the clamour for regulation,” the authors wrote.
However, developing regulatory frameworks for crypto assets is a difficult undertaking, claim Narain and Moretti.
Additionally, the authors have called for a coordinated, unified, and comprehensive international framework for cryptocurrencies. They also criticized the regional authorities’ divergent approaches to crypto regulation.
Global regulatory framework
Commenting on the global regulatory framework, Narian and Moretti stated that irregularities in the crypto space have led to regulatory difficulties.
They further clarified that some authorities might prioritize financial integrity, safety, and consumer protection. Traditional financial regulations do not easily apply to most miners, validators, and protocol developers working with digital assets.
A worldwide framework would bring order to the markets, the paper continued. Additionally, it will serve to establish consumer confidence, set boundaries for what is allowed, and provide a secure environment for innovation.