What exactly is the Crypto global regulatory framework proposed by the International Monetary Fund?

The International Monetary Fund (IMF) has proposed an outline in order to establish a global Crypto regulatory framework.

Because the agency believes that "uncoordinated regulatory measures could facilitate potentially destabilizing capital flows," they want an international guideline to assess possible risks and reduce general uncertainty.

The mission of the IMF is to maintain the stability of the international monetary and financial system, and Crypto is profoundly changing the system。

The IMF sees many benefits from an innovative digital asset industry, but is also concerned about market volatility. The current sell-off in the market may be due to concerns about the new epidemic and the upcoming policy reduction in the United States, so the total market capitalization looks red.

The agency is concerned that Crypto’s volatility “may also reflect froth in an overvalued environment.”

The IMF blog states,Many Crypto-Related Activities Still Unregulated, Policymakers Struggle to Monitor 'Financial Stability Risks', which they believe could "become a systemic risk in some countries".

These risks underscore why we now need comprehensive international standards to address risks to the financial system, while creating an enabling environment for useful digital asset products and applications.

In addition to determining valuations, the financial institution sees other challenges in the digital asset ecosystem, such as the "identification, monitoring and management of risks" that "disregard regulators and companies."This will require oversight of Crypto exchanges and wallets to identify integrity risks, “underreserves and inaccurate disclosures of certain stablecoins”。

The IMF is concerned that the boom in digital assets will lead to an increase in developing countries, which they say is "going too far," a term for "when these assets replace national currencies," looking for ways around exchange restrictions , and the balance of payments of countries.

The IMF called on the Financial Stability Board, which coordinates "regulatory, supervisory and other financial sector policymaking," to create "a global framework encompassing crypto regulatory standards," with the aim of providing a path to manage crypto, citing "financial stability risks" and deceptive practices. .

This path should be able to be implemented by all jurisdictions to further reduce possible regulatory arbitrage. They see this as a "tremendous task" but hope that from now on they can ensure financial stability and benefit from superior "technological innovation".

The agency believes that in the face of cross-border transactions of digital assets, the regulatory methods provided by different countries can adopt different strategies, but this is "limited."They believe that regulating digital asset service providers operating in different countries is a difficult task, and existing laws and regulations may fall far short of covering cross-border remittances。

Standard-setting bodies responsible for different products and markets provide varying degrees of guidance, and while these efforts are useful, they are not sufficiently coordinated to establish a global framework to manage risks to market integrity, financial stability, and consumer and investor protection .

As the Crypto ecosystem develops financial systems in depth on a global scale, the IMF outlines three elements of a "level playing field across activities and risks":

1. Digital asset service providers that provide key functions should be licensed or authorized.

2. Requirements should be tailored to the primary use cases of digital assets and stablecoins.

The original text comes from bitcoinist, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.

The original text comes from bitcoinist, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.