The International Monetary Fund (IMF) has restated its stance on the need for cryptocurrency regulation in specific countries, stressing that an outright prohibition may not be the most effective approach.
In a report published on June 22, focusing on Latin America and the Caribbean, the IMF highlighted the diverse approaches adopted by local governments regarding integrating cryptocurrencies and central bank digital currencies (CBDCs). El Salvador has recognised Bitcoin as a legal tender since September 2021, while the Bahamas became the pioneer in launching its own CBDC, the Sand Dollar, in October 2020.
Brazil, Argentina, Colombia, and Ecuador, where crypto regulation is currently in progress, are among the leading countries worldwide regarding cryptocurrency adoption. Their efforts aim to provide financial services to the unbanked and facilitate faster and more affordable payments, among other benefits. Also, most central banks in the region are either considering or have already started exploring the adoption of digital currencies.
The IMF highlighted the potential benefits of well-designed CBDCs in strengthening payment systems, enhancing resilience, promoting efficiency, and fostering financial inclusion in Latin America and the Caribbean. Outright bans on crypto assets may not be a sustainable long-term solution. Instead, the region should address the underlying factors driving crypto demand, such as unmet digital payment needs, while promoting transparency by including crypto asset transactions in national statistics.
While the IMF has consistently opposed countries adopting cryptocurrencies as legal tender, on June 19, Tobias Adrian, the monetary and capital markets department director, proposed a payment system that uses a single ledger to record CBDC transactions. This idea drew criticism from various stakeholders within the crypto industry.
