March 21, 2023

IMF says unbacked crypto assets require regulation

The IMF, in a publication, underscored that unbacked crypto assets are not covered by existing conduct, prudential, or payment regulations.

The IMF said that unbacked cryptocurrency can generate risks to market integrity, market conduct, and potential financial stability. These crypto assets were originally developed to democratize payments but are mostly used for speculation. With this, IMF said that: (i) global bodies need to develop common taxonomies that can inform global and cross-sectoral standards while improving data insights; (ii) regulatory standards should be risk-based, with greater requirements on entities and activities that generate more risk; and (iii) crypto asset service providers that deliver core functions and generate key risks should be licensed, registered, or authorized.