The International Monetary Fund prefers to differentiate and regulate crypto assets rather than impose an outright ban, although the nuclear option will remain on the table for now.
Speaking on the sidelines of the G20 finance ministers meeting in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained how the United Nations financial body views digital assets and what it wants to see in terms of regulation.
“We are very happy to manage the world of digital money,” and this is our top priority, he said.
During an interview with Bloomberg published on February 27, he answered questions about his recent comments on a complete ban on cryptocurrencies. He said there is still confusion about the classification of digital money.
“Our first goal is to distinguish between state-backed central bank digital currencies and publicly issued crypto assets and stablecoins.”
Fully-backed stablecoins create “pretty good room for the economy,” but unbacked crypto assets are speculative, high-risk, and not money, he added.
“There needs to be more regulation,” IMF Managing Director Kristalina Georgieva said https://t.co/TMq6eWWwwf
— Bloomberg Crypto (@crypto) February 25, 2023
Citing a new paper suggesting a global regulatory standard, he said crypto assets cannot be legitimate because they are not backed.
However, the option to ban cryptocurrencies “will not be taken off the table” if they start to pose a greater risk to financial stability, he warned.
However, good regulation, predictability, and consumer protection would be a better option, and bans should not be considered, Georgieva said.
related: IMF executive board approves crypto policy framework, including no crypto as legal tender
When asked what could have prompted the decision to ban crypto, he said that the inability to protect consumers from the rapidly growing world of crypto assets would be the main catalyst.
The IMF, the Financial Stability Board, and the Bank for International Settlements (BIS) are jointly preparing regulatory framework guidelines to be released in the second half of the year.