A financial institution very critical of cryptocurrencies, the International Monetary Fund (IMF) campaigns on a daily basis for regulation of this asset class. The results of his latest study on the subject should only reinforce this feeling. This has in particular made it possible to highlight the prevalence of the use of cryptocurrencies in countries which can be considered as corrupt.
A situation that stems from the lack of regulation of cryptocurrencies
For its study, the IMF interviewed 2,000 to 12,000 people in 55 different countries. Participants were asked if they owned or used digital assets. The various answers formulated by the latter enabled the IMF to conclude that “ cryptocurrencies can be used to transfer proceeds of corruption or circumvent capital controls “. This conclusion adds weight to the IMF’s call for more consistent regulation of cryptocurrencies across international borders. The institution considers that the absence of a regulatory framework promotes the phenomenon highlighted in his latest study.
In 2021, the IMF had already published a document presenting an analysis of the interaction between cryptocurrencies and the traditional financial system. The institution reported at the time the difficulty of monitoring the risks of this interaction due to the lack of regulation. Some countries being more active than others on the subject, the IMF then made a proposal to regulate the crypto sector on a global scale. Among other things, he recommended licensing crypto service providers and establishing clear guidelines and requirements for regulated financial institutions that expose themselves to crypto.
The European Union, the United Kingdom and the United States lead by example
Although there is not yet a global regulatory framework for cryptocurrencies, several countries have increased their efforts to regulate them. UK, the Financial Conduct Authority (FCA) has been at the forefront of cryptocurrency regulationrecently announcing that five companies have been added to its approved list of crypto service providers in the country. Similarly, the United States is currently working to put in place a regulatory framework, but still struggles to provide the necessary clarity.
The European Union (EU) is also taking steps forward by providing guidance on how cryptocurrencies should be regulated. Its digital assets bill, MiCA, passed on March 14 with controversy surrounding cryptocurrency mining. This was finally withdrawn and should undergo modifications in order to oblige industry players to be more respectful of the environment. Despite all these efforts, there are still many countries in the world where the sector is unregulated.
Coordinated regulation would certainly make it possible to effectively protect the international financial system from the risks associated with the perverse use of cryptocurrencies. However, it is important that players in the cryptosphere are involved in this process in order to prevent regulation from becoming a tool of repression.
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Luc Jose Adjinacou
Far from having dampened my enthusiasm, an unsuccessful investment in 2017 on a few cryptos only increased my enthusiasm. I therefore resolved to study and understand the blockchain and its many uses and to relay with my pen information relating to this ecosystem.