IMF Says Crypto Has Greater Potential as a Payment Method Over Weak Currencies
The International Monetary Fund (IMF) released a report stating that cryptocurrencies have greater potential as a form of payment compared to weak currencies. According to the IMF, crypto hedges significantly better against weaker currencies and has developed a greater presence as a speculative instrument.
Cryptocurrency’s Mainstream Adoption and Regulation
The International Monetary Fund (IMF) has recently released a report discussing some potential laws that might help crypto thrive and provide a secure environment for innovation. The report highlights how, despite the fact that cryptocurrencies have been around for more than a decade, regulating them has just recently become a concern. It demonstrates how quickly adoption has accelerated in recent years.
In the new report authored by IMF director of capital markets Aditya Narain and assistant director Marina Moretti, authorities stated that crypto assets have firmly switched from “niche products” to those used for riskier trading, hedging against weak currencies, and payment tools.
The authors said that this, in addition to the recent collapses of crypto issuers, exchanges, and hedge funds, has “added momentum to the push for regulation.” If there had been proper oversight, the value of cryptocurrencies might not have plummeted so rapidly. However, it will not be simple, as the implementation of new regulations will be difficult.
The Struggle With Crypto Regulation
According to Narain and Moretti, establishing regulatory frameworks for crypto assets is a challenging task, citing the market’s rapid expansion, the complexity of monitoring, and the lack of practical expertise among regulators as some of the most significant barriers, noting:
“Regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities.”
The authors have criticized the varying approaches to crypto regulation taken by various regulators and have advocated, instead, for a global cryptocurrency regulatory framework that is coordinated, consistent, and all-encompassing. They stated:
“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.”
Adding:
“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.”
State of Crypto Regulation Across the Globe
Regulators from all over the globe have gathered around the regulatory table.
In Europe, The final legislative wording for the long-awaited Markets in Crypto-Assets (MiCA) legislation is expected to be published within the next four to six weeks. In the United States, the Responsible Financial Innovation Act, a crypto regulation law, is expected to address some of the most pressing issues confronting the digital assets sector.
Even ardent crypto skeptics have begun to agree that regulation is preferable to a sweeping ban, with U.S. congressman Brad Sherman being the latest to shift his opinion after acknowledging that the market has too much money and influence to be banned at this time.
