A senior official at the International Monetary Fund (IMF) has admitted that regulating cryptocurrency will necessitate nothing less than a determined global effort and a global accord on crypto, which most would argue is still a long way off.
Gita Gopinath, the IMF’s senior economist, made the remarks, and is scheduled to become the organization’s first deputy managing director in 2022.
Gopinath was speaking during a lecture for the New Delhi-based economics think-tank the National Council of Applied Economic Research.
Her speech was entitled “Global Recovery from the Pandemic Policy Challenges.”
Gopinath called for regulations, but stated that practical difficulties could blight any one nation’s efforts to police the sector.
She explained that countries around the world are currently “trying different things” in the regulatory space, but admitted that there were “obviously challenges to banning” crypto as “a lot of these crypto exchanges are offshore and they’re not subject to the regulations of a particular country” – meaning that “there are ways for that kind of activity to continue.”
Gopinath also conceded that bans could not be a “passive phenomenon” – and would involve “monitoring, supervision and regulation.”
But she went a step further, adding that what was “actually needed” was a “global effort,” saying:
“No individual country can solve this problem on their own, given how easy it is to do these transactions cross-border. So there is a need for global policy on that front. And I think that’s needed urgently.”
She claimed that crypto adoption was also on the rise in developing nations, where it was creating a new set of financial problems for economic policymakers. The IMF official said:
“It seems to be more attractive to adopt cryptoassets and cryptocurrencies in emerging developing economies than in advanced economies. If you look at take up around the world we are certainly seeing that there’s a rapid amount of adoption that’s happening in emerging and developing economies.”
She claimed that such an adoption “poses problems” because “usually emerging and developing economies have exchange rate controls” and “capital control capital flow measures” – and that cryptoassets “can be ways to evade those kinds of regulations.”
Expanding on her thoughts on a “ban” on crypto, Gopinath said that regulation is “absolutely important for this sector” and added that “if people are using it as an investment class then the same kinds of regulations that you have on security traders and security dealer brokers should also apply to crypto-assets.”