The International Monetary Fund would prefer to differentiate and regulate crypto assets over explicit bans, but the nuclear option will remain on the table.
Kristalina Georgieva, managing director of the International Monetary Fund, spoke on the sidelines of the G20 finance ministers’ meetings in Bengaluru, India, to clarify how the United Nations’ financial agency perceives digital assets and its regulatory preferences.
She stated, “We are very much in favour of regulating the world of digital money” as this is a top priority.
During an interview with Bloomberg on February 27, she responded to a query regarding her recent remarks regarding a possible total crypto ban. She stated that there is still considerable ambiguity regarding the classification of digital currency.
“Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.”
Fully-backed stablecoins produce a reasonably decent space for the economy, whereas unbacked crypto assets are speculative, high-risk, and not money. She cited a recent paper recommending global regulation standards to argue that unbacked crypto assets cannot be legal tender.
“There has to be more regulation,” IMF Managing Director Kristalina Georgieva says https://t.co/TMq6eWWwwf
— Bloomberg Crypto (@crypto) February 25, 2023
She cautioned that banning cryptocurrencies should be considered if they become a more significant threat to financial stability. However, an outright ban would be preferable to effective regulations, predictability, and consumer protection.
She responded that the inability to safeguard consumers from the swiftly evolving world of crypto assets would be the primary catalyst for the decision to ban crypto.
In the second half of the year, the IMF, the Financial Stability Board, and the Bank for International Settlements will disseminate regulatory framework guidelines.