The International Monetary Fund (IMF) called Its impact on the global economy will be far-reaching, calling for regulators around the world to work towards a concerted effort to regulate the crypto market.
According to the recent IMF in September preliminary report, The Crypto Market Has Reached A Global Market Cap Of 3 trillion dollars November 20201, Integrated into the mainstream financial system. As a result, there is an urgent need to regulate markets to prevent further contagion that could ruin the global economy.
The challenge, however, lies in adopting a concerted effort towards regulating cryptocurrencies. The fast-paced nature of cryptocurrencies makes it difficult for regulators to monitor the thousands of actors involved in the market.
As the variety of use cases for crypto assets attract regulators such as banks, commodities and securities, simply applying existing regulatory frameworks may not be enough.WhileSome regulators prioritize consumer protection, while others optimize safety, soundness, or financial soundness.
Differences in regulatory approaches
Several countries are actively addressing issues related to crypto regulation. For example, countries such as Japan and Switzerland have proposed legislation, while countries such as the European Union and the United States are in the drafting stage.
but, Countries take different approaches to manage their crypto-asset regulatory policies.
The IMF said:
“As an extreme example, authorities prohibit residents from issuing or holding cryptocurrencies or using them for certain purposes, such as trading or making payments in cryptocurrencies.
On the contrary, some countries are even trying to be more welcoming and inviting companies to develop markets for these assets. “
Diverse regulatory approaches do not provide a level playing field, according to the IMF. As a result, many cryptocurrency actors have opted to move to friendlier jurisdictions with the fewest regulatory restrictions.
call for global regulation
The IMF is urging national authorities to consider working towards a global regulatory framework to fill the gaps created by regulatory fragmentation.
A comprehensive framework covers all aspects of the crypto market while aligning with the mainstream regulatory system.
The IMF added:
“The global regulatory framework brings order to the market, instills consumer confidence, sets limits on what is acceptable and provides a safe haven for useful innovation to continue.”
