- The lack of legislation is the most significant risk for the economy
- The regulators finally acknowledge the new phenomenon
The world’s regulatory authorities and the International Monetary Fund (IMF) have presented a roadmap to organize measures that would prevent crypto-assets from threatening macroeconomic and financial stability. The roadmap is supposed to provide a “comprehensive policy response” to the potential threats presented by the new technology.
The lack of legislation is the most significant risk for the economy
According to the document prepared by the Financial Stability Board (FSB) and the IMF, in some cases, the risks are aggravated by non-compliance with current legislation. Many of the supposed advantages of crypto-assets, such as making cross-border transactions cheaper and faster and promoting financial inclusion, have not yet been fully implemented.
“Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability,” the document said.
“The risks of crypto-assets are not confined to financial stability, but can also include macroeconomic risks relating to monetary sovereignty, capital flow volatility and fiscal policy,” wrote Klaas Knot, Chair of the FSB.
The regulators have identified the timescale for the IMF and G20 members to implement the respective recommendations determined by the FSB and the International Organization of Securities Commissions (IOSCO).
The regulators finally acknowledge the new phenomenon
The document represents a change in the opinion of regulatory authorities. For several years, they have watched the sector considering its threats to be insignificant. The regulatory pressure has increased since the FTX meltdown in November 2022 which shocked the markets and resulted in losses for the investors.
“A comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability,” said the document. The paper will be presented at the G20 summit in New Delhi this September.
The EU has approved the world’s first comprehensive set of rules for crypto-assets, however, other countries have their own approaches to the crypto sector. The purpose of this paper is to provide a global set of standards and approaches to crypto. It is also important to establish the tax treatment of crypto-assets and determine how existing laws apply to the sector.
