• The International Monetary Fund (IMF) has proposed a five-point plan to regulate the cryptocurrency industry.
• This plan calls for the licensing, registration, and authorization of crypto asset service providers, additional oversight for entities that carry out multiple functions in the cryptosphere, and strict prudential requirements for stablecoin issuers.
• The IMF also suggests that established financial institutions dealing in cryptocurrencies be subject to clear requirements regarding the risks associated with transacting in crypto, and that a robust, global crypto regulation and supervision framework be implemented.
The International Monetary Fund (IMF) has recently released a five-point plan to regulate the cryptocurrency industry. The plan is designed to provide a framework for exchanges, investors, and other financial service providers to work within in order to protect customers and promote the safety of the global financial system.
The first point of the plan calls for all crypto asset service providers to be licensed, registered, and authorized. This includes those providing storage, transfer, exchange, settlement, and custody services. Rules should be similar to those governing providers of services in the traditional financial sector, such as the requirement for customer assets to be held separately from the company’s own assets and the responsible authority to be clearly defined.
The second point calls for entities that carry out multiple functions in the cryptosphere to be subject to additional oversight. Any potential conflict of interest should be assessed by the responsible authority and prohibited, if necessary. These entities should also be subject to stringent regulations on transparency, so that all dependencies and operations can be clearly identified.
The third point is focused on stablecoin issuers, who should be subject to strict prudential requirements due to their increasing use as a store of value for investors. Without proper oversight and regulation, these holdings could destabilise monetary and financial stability, and in cases of major stablecoins a regulation on the scale of that employed in the banking sector could be required.
The fourth point is that established financial institutions dealing in cryptocurrencies should be subject to clear requirements regarding the risks associated with transacting in crypto. Finally, the IMF suggests that a robust, global crypto regulation and supervision framework be implemented. This is due to the borderless nature of cryptocurrencies, which has highlighted the ineffectiveness of national authorities to adequately deal with the digital coins.
In conclusion, the IMF’s five-point plan provides a framework for exchanges and investors to work within in order to ensure the safety and security of customers and the global financial system. It calls for licensing and registration of crypto asset service providers, additional oversight for entities carrying out multiple functions in the cryptosphere, strict prudential requirements for stablecoin issuers, and clear requirements for established financial institutions dealing in cryptocurrencies. Finally, it calls for a robust, global crypto regulation and supervision framework.