In an accompanying blog post, the IMF conceded that crypto offers “quick and easy payments,” as well as “innovative financial services” and “inclusive access to previously unbanked parts of the world.”
It wrote that the crypto “ecosystem is also flourishing, replete with exchanges, wallets, miners and stablecoin issuers.”
But it also warned that crypto is rife with “consumer protection risks remain substantial given limited or inadequate disclosure and oversight,” noting that some coins were “likely created solely for speculation purposes or even outright fraud.”
The IMF claimed that “cryptoization” was a risk in “emerging economies,” where “crypto adoption” has “outpaced that of advanced economies,” due to factors such as “weak central bank credibility and a vulnerable banking system,” as well as inadequate payments networks.
This cryptoization, the authors added, “can reduce the ability of central banks to effectively implement monetary policy” and bring about “financial stability risks” through “funding and solvency risks arising from currency mismatches.” It could also bring about damages to consumers and compromise financial integrity, they remarked.
The solution, per the IMF? More regulation, more policing – and more CBDCs.
The report’s authors wrote:
“Policymakers should implement global standards for crypto assets and enhance their ability to monitor the crypto ecosystem by addressing data gaps. Emerging markets faced with cryptoization risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies.”
On a global scale, the IMF stated that “policymakers should prioritize making cross-border payments faster, cheaper, more transparent and inclusive” – using plans drawn up by the G20.
It also called on national regulators to “prioritize the implementation of existing global standards,” and bolster applicable securities, payments, clearing, and settlements protocols.
Stablecoin issuers were handed yet another warning of a possible regulatory storm ahead, with the authors concluding that “as the role of stablecoins grows,” regulations “should be proportionate to the risks they pose and the economic functions they serve.” Rules “should be aligned,” the body suggested, with “entities that provide similar products,” such as “bank deposits or money market funds.”
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Learn more:
- Regulators Must Make Sea Change on Crypto, and IMF Is Ready To Engage
- IMF Says Making Bitcoin a National Currency is an 'Inadvisable Shortcut'
- CBDC Shilling and Bitcoin Bashing Might Reach the G20 Level
- Central Banks Should Allow Salaries, Social Transfers to be Paid in CBDCs - BIS