-The International Monetary Fund (IMF) has made recommendations to regulate the cryptosphere and provide a framework for exchanges and investors to work to.
-This includes the licensing, registration, and authorization of crypto asset service providers, such as those providing storage, transfer, exchange, settlement, and custody services.
-The IMF also recommends additional oversight for entities carrying out multiple functions in the cryptosphere, as well as stringent regulations on transparency and prudential requirements for stablecoin issuers.
The International Monetary Fund (IMF) has issued a five-point plan to regulate the cryptosphere, providing a framework for exchanges and investors to work to. The IMF’s advice is designed to ensure the secure and transparent functioning of the crypto market, protect consumers, and promote trust and confidence in the crypto sector.
The first recommendation of the IMF is for crypto asset service providers to be licensed, registered, and authorized. This includes providers of storage, transfer, exchange, settlement, and custody services, and they should be subject to the same rules as those governing providers of services in the traditional financial sector. It is also recommended that customer assets should be held separately from the company’s own assets and the responsible authority should be clearly defined.
The second suggestion from the IMF is for entities that carry out multiple different functions in the cryptosphere to be subject to additional oversight. This is to prevent any conflict of interest, and if necessary, such conflicts should be prohibited. It is also important that these entities are subject to stringent regulations on transparency, so that all dependencies and operations can be clearly identified.
The third part of the IMF’s plan is that stablecoin issuers should be subject to strict prudential requirements. This is because such holdings have become a store of value for a growing number of investors, and without proper oversight and regulation, they could have a destabilizing effect on monetary and financial stability. In the case of major stablecoins, the IMF believes that a regulation on the scale of that employed in the banking sector could be beneficial.
The fourth point of the IMF’s recommendations is that established financial institutions that deal in cryptocurrencies should be subject to clear requirements regarding the risks that arise from transacting in crypto. This will help to protect their customers from any potential losses.
Finally, the IMF proposes that a robust, global crypto regulation and supervision framework should be put in place. Crypto’s borderless nature has highlighted the ineffectiveness of national authorities to adequately deal with digital coins, and a unified approach that can adapt to changes in the market is needed.
Overall, the IMF’s five-point plan is designed to ensure the secure and transparent functioning of the crypto market, protect consumers, and promote trust and confidence in the crypto sector. By implementing this framework, the IMF hopes to create a safer and more trusted cryptosphere.