Global Regulators and IMF Develop Plan to Mitigate Crypto Asset Risks
Discover how international financial authorities are tackling crypto asset risk.
The International Monetary Fund and international financial authorities on Thursday outlined a plan for coordinating actions to prevent cryptocurrencies from compromising financial and macroeconomic stability. According to a study by the Financial Stability Board, the IMF, and the G20’s risk inspector, these risks are sometimes made worse by a disregard for the law.
Many of the alleged advantages of crypto assets, including faster and less expensive cross-border payments and greater financial inclusion, have not yet been realized, it continued.
“Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability,” the research stated.
The paper outlines deadlines for IMF and G20 members to put new crypto regulation suggestions from the Financial Stability Board and IOSCO, a global network of securities regulators, into practice.
After several years of observing no threat from the industry, opinions have hardened with the collapse of the cryptocurrency exchange FTX last November, which shook markets and left investors nursing losses. This signals another step in regulatory thinking.
“A comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability,” the report, which was submitted to G20 leaders at a conference this month in New Delhi, stated.
The first complete set of regulations for crypto assets has been approved by the European Union, while other regions have taken a patchier approach to an industry that has no borders and where fraud and manipulation are “prevalent”.
Governments should also avoid running significant deficits, which can result in inflation that weakens fiat currencies and promotes alternatives like cryptoassets, the study stated.
Along with how current rules apply to the industry, it should be made clear how tax laws apply to crypto assets.
Keywords: crypto asset risk, bitcoin price india, ethereum price india
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