The past few years have seen crypto assets moved from being “niche products” to having more of a mainstream presence, prompting the need for more comprehensive regulation of the space, according to the International Monetary Fund (IMF).
In a new report shared by the IMF on Sept. 5, director of IMF’s Monetary and Capital Markets Department Aditya Narain and assistant director Marina Moretti said crypto has seen a shift from “niche products” to ones used for speculative investments, hedges against weak currencies, and payment instruments.
The authors also argued that recent failures of crypto issuers, exchanges, and hedge funds have “added impetus to the push to regulate.”
The failures of crypto issuers, exchanges and hedge funds have added impetus to the push to regulate these digital assets. Read more in F&D. https://t.co/Vfyr4uN6NY pic.twitter.com/4LF9P3DZpc
— IMF (@IMFNews) September 5, 2022
However, applying regulatory frameworks to crypto assets is an uphill battle, according to Narain and Moretti, highlighting the market’s rapid evolution, the difficulty of monitoring, and the absence of workable skills between regulators among the more serious obstacles.
“Regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities.”
The authors have also called out the inconsistent approach to crypto regulation amongst various regulators, and argue the need for a global crypto regulatory framework that is coordinated, consistent, and comprehensive.
“Some regulators may prioritize consumer protection, others safety and soundness or financial integrity. And there is a range of crypto actors—miners, validators, protocol developers — that are not easily covered by traditional financial regulation,” they explained.
“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.”
However, change is coming, just slowly. Even staunch crypto skeptics have started to gather at the regulation table, with U.S. congressman Brad Sherman becoming the latest to change his tune after admitting the market “has too much money and power behind it,” to ban it now.
Related: Australia’s new government finally signals its crypto regulation stance
Established in 1944, the International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member countries by promoting economic policies that promote financial stability and monetary cooperation.
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