International Monetary Fund (IMF) Chief Economist Gita Gopinath called upon emerging economies like India to regulate crypto assets rather than imposing a complete ban.
The chief economist spoke at a lecture on ‘Global Recovery and Policy Changes in 2022’, organised by the National Council of Applied Economic Research (NCAER). “Regulating crypto assets and currencies is essential, especially for emerging and developing economies, as banning them may not work,” she noted.
Gita Gopinath pointed to the greater crypto adoption in emerging markets and the challenges underpinning them. She expressed the urgent need for a global policy on cryptocurrencies, as no single country could solve this complex problem involving cross-border transactions.
According to a report from Chainalysis, a blockchain data platform, India ranks second in global crypto adoption in 2021. Her remarks come at a time when India is looking to regulate crypto assets in the country.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was supposed to be tabled in parliament during the ongoing winter session. However, the bill hasn’t obtained clearance from the cabinet and may not be taken up until the next budget session in 2022.
IMF’s Recommendation For Crypto Regulation
Meanwhile, in a post titled Global Crypto Regulation Should be Comprehensive, Consistent, and Coordinated, the IMF has made specific recommendations for countries to regulate cryptocurrencies.
According to the authors, crypto service providers offering storage, transfer, settlement, and custody of assets should be authorised or licensed. “Licensing and authorization criteria should be clearly articulated, the responsible authorities clearly designated, and coordination mechanisms among them well defined.”
Besides licensing, IMF warned emerging markets against something called ‘cryptoization’ – a scenario where crypto assets start replacing domestic currency for transactions.
The government has clarified that crypto will not get legal tender status in India. Likewise, stakeholders, including crypto exchanges, have been pushing for regulations of crypto as an asset and not a currency.
And lastly, IMF stressed the urgent need for cross-border collaboration to address the complex legal, regulatory, and technological challenges.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
Table of content
Subscribe to Our Newsletter with exclusive content.