Global Standard Setters: Banning Cryptocurrency Won’t Eliminate Risks


This article has been republished with permission from Binance News.

According to CoinDesk, a joint policy roadmap published by global standard setters, including the Financial Stability Board (FSB) and the International Monetary Fund (IMF), states that banning cryptocurrency will not eliminate its risks. The policy paper, commissioned by the G20 under India’s leadership, found that comprehensive regulatory and supervisory oversight of crypto-assets should be a baseline to address macroeconomic and financial stability risks. The report is set to be presented to the G20 this weekend and is part of a series of efforts by international bodies to introduce global norms for the industry, particularly following the numerous crypto enterprise collapses of 2022.

The report suggests that jurisdictions should strengthen monetary policy frameworks, guard against excessive capital flow volatility, and adopt unambiguous tax treatment of crypto to tackle macroeconomic risks from the sector. It also reiterates the IMF’s stance that blanket bans on crypto may not help in mitigating associated risks, and targeted restrictions might be more useful for emerging economies. However, the report also states that imposing blanket bans on all crypto activities is not only expensive and technically challenging, but could lead to activity migrating to other jurisdictions, creating spillover risks.

The IMF and FSB suggest that jurisdictions might consider targeted and temporary restrictions to manage some risk factors in stressful times or while countries find better internal fixes. The paper also addresses concerns about the proliferation of stablecoins, which are crypto stabilized against the value of other assets or currencies, threatening currency replacement or bank runs in emerging economies. The report states that global stablecoins adopted by multiple jurisdictions may transmit volatility more abruptly than other crypto-assets and may cause significant risk to financial stability.

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