In a recent publication by the International Monetary Fund (IMF), the global body stated that there should be a global approach towards the regulation of cryptocurrencies. The financial institution highlighted significant growth in the crypto sector for the past 11 months, noting that there should be a global collaboration effort toward its regulation.
The market capitalization of digital assets has surged by over 200% this year alone, touching $3 trillion a few weeks back. IMF’s report is coming as regulators around the world are looking for the right approach towards the protection of investors in the market. As the adoption of digital assets increases, the level of fraud and crime using crypto assets has also increased.
A Coordinated Approach To Crypto Regulation Is Needed
The global financial institution highlighted some issues related to Bitcoin and digital assets in general. IMF stated that a lot of digital currencies are currently overvalued, and the unavailability of proper regulation has left consumers more exposed to financial frauds in the market. The fund added that the only way to stabilize the market is through a coordinated approach to crypto regulations.
The post noted that crypto assets are threatening the existence of domestic currency which has a standard regulatory framework. These digital assets circumvent capital account management measures and exchange restrictions. As a result of such risks, there is a need for broader international standards that address the challenges posed by crypto assets in the financial system, according to the post.
It Is Difficult To Use Crypto Assets As Money
Managing Director at IMF, Kristalina Georgieva, in a recent event hosted by Bocconi University in Italy, stated that it will be difficult to take Bitcoin and other crypto-assets as money. She pointed out that cryptocurrencies have a lot of issues regarding them as money.
In line with her statement, IMF stated that it’s important for international organizations to solve the regulatory, technical, and supervisory issues related to cryptocurrencies. The fund says it’s working with the international regulatory community to develop a proper framework to regulate the crypto industry.