• The International Monetary Fund (IMF) has provided a five-point plan to regulate the cryptosphere, including licensing and registering crypto asset service providers, additional oversight of entities that carry out many different functions, strict prudential requirements for stablecoin issuers, clear requirements for established financial institutions that deal in cryptocurrencies, and a robust, global crypto regulation and supervision framework.
• The IMF is advocating for a unified approach to regulation that is capable of adapting to the ever-changing landscape of the cryptosphere.
• The IMF recommends that the responsible authority in each country take the lead in developing effective regulations that can be implemented globally.
The International Monetary Fund (IMF) has issued a five-point plan to regulate the cryptosphere and provide a framework for exchanges and investors to work within. The plan is intended to ensure the safety of customer assets and the stability of the financial system.
Firstly, the IMF is advocating for the licensing, registration and authorization of crypto asset service providers, including those providing storage, transfer, exchange, settlement and custody services. The regulations should be similar to those governing providers of services in the traditional financial sector. The customer assets should be held separately from the company’s own assets, and the responsible authority should be clearly defined.
Secondly, entities that carry out a variety of functions in the cryptosphere should be subject to additional oversight to prevent any conflict of interest that may arise. The responsible authority should assess any potential conflict of interest and prohibit it, if necessary, and the entities should be subject to stringent regulations on transparency to ensure that all operations and dependencies can be clearly identified.
Thirdly, the IMF is advocating for the implementation of strict prudential requirements for stablecoin issuers, as they are becoming a store of value for more and more investors. Without proper oversight and regulation, such holdings could destabilise the monetary and financial stability. In cases of major stablecoins, it is recommended that the regulation is on the scale of that employed in the banking sector.
Fourthly, established financial institutions that deal in cryptocurrencies should be subject to clear requirements regarding the risks that arise from transacting in crypto. Finally, the IMF recommends that the responsible authority in each country take the lead in developing effective regulations that can be implemented globally. This is necessary due to the borderless nature of the cryptosphere, which highlights the ineffectiveness of national authorities to adequately deal with the digital coins.
The plan provided by the IMF is intended to ensure the safety of customer assets and the stability of the financial system. It is hoped that the unified approach of the IMF will help to create an effective global regulatory framework for the cryptosphere.