In response to mounting worries raised by the war in Ukraine, the International Monetary Fund (IMF) is urging world governments to adopt crypto norms.

The IMF openly addressed the potential use of crypto in Russia's sanctions evasion and its potential to jeopardize the stability of existing financial institutions through the shifting banking landscape in its Global Financial Stability Report released on Tuesday.

According to the IMF, the global financial system has seen an increase in "crypto" as a result of the conflict in Ukraine and the COVID-19 pandemic. Despite the fact that this is mostly attributable to normal commercial activity, the IMF has warned that it might be exploited to avoid identity checks in financial flows, thus allowing people to deal anonymously abroad.

Bad actors can dodge penalties by using non-compliant exchanges, mixers, and other methods, according to the IMF, while US and UK regulators have pushed crypto businesses to be more vigilant. They might also use energy to mine cryptocurrency and enhance their funds.

The IMF suggested that nations focus on implementing the Financial Action Task Force standards, which included a travel rule for crypto assets that require exchanges to communicate information, to avoid these crypto-specific risks. Identification of the sender and recipient, as well as the execution of extra legislation, are all required. Cryptography will be covered under foreign exchange and money flow management legislation.
<blockquote> “Essential steps include the development of a comprehensive, consistent and coordinated regulatory approach to crypto-assets and its effective application to capital flow management measures; the establishment of international collaborative agreements for implementation; the addressing data gaps; and harnessing technology (‘regtech’ and ‘suptech’),” the report said.</blockquote>
The research also examines the decentralized finance (DeFi) space as a new type of intermediation, urging regulators to address the new legal issues that DeFi raises – namely, how to govern a company that lacks a central point of contact.
<blockquote> “Regulation should focus on elements of the crypto ecosystem that enable DeFi, such as stablecoin issuers and centralized exchanges,” the report suggests. “Authorities should also encourage DeFi platforms to be subject to robust governance systems, including industry codes and self-regulatory bodies. These entities could provide an effective conduit for regulatory oversight.”</blockquote>
In December of last year, the IMF advocated for a "comprehensive, consistent, and coordinated" worldwide policy for Bitcoin.

IMF Calls For Coordinated Effort and Capital Controls For Crypto

The IMF openly addressed the potential use of crypto in Russia's sanctions evasion and its potential to jeopardize the stability of existing financial institutions through the shifting banking landscape in its Global Financial Stability Report released on Tuesday.

Prabhjeet Bhatla is a cryptocurrency writer covering startups and a researcher since 2020. She has authored many articles for Entrepreneur India and APAC (digital and print) on cryptocurrency and ever-evolving Blockchain, the technology behind Bitcoin, and other cryptocurrencies. She specializes in applied cryptography, privacy-enhanced information storage systems, anonymous cryptocurrencies, elliptic curve crypto-systems, and satellite television piracy.

IMF Calls For Coordinated Effort and Capital Controls For Crypto

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