The crypto space has been around for barely a decade but it has gained significant worldwide popularity and acceptance in the past couple of years. And now prominent international bodies are now paying attention to the technology behind it.
The International Monetary Fund(IMF), a world acclaimed financial body, has released a report in September 2022 which substantiates the fact that crypto has now gained more mainstream acceptance.
According to the report which was released on September 5, titled “REGULATING CRYPTO: The right rules could provide a safe space for innovation” and co-authored by the Deputy Director of IMF’s Monetary and Capital Market Department, Aditya Narain, and Deputy Director Marina Moretti ; digital assets are no longer niche products. They now have a more mainstream presence, hence the need for more extensive regulation in the crypto space.
The need for regulation
In view of the growing traction of cryptocurrencies, regulators need to coordinate a meaningful global response, according to the International Monetary Fund.
“Crypto assets have been around for more than a decade, but it’s only now that efforts to regulate them have moved to the top of the policy agenda.
The failures of crypto issuers, exchanges, and hedge funds — as well as a recent slide in crypto valuations — have added impetus to the push to regulate.” – the report.
However, the report outlines some challenges of regulating crypto. It says the space is evolving at a rapid pace and regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities. Also, Monitoring crypto markets is difficult because data is patchy, and regulators find it tricky to keep tabs on thousands of actors who may not be subject to typical disclosure or reporting requirements.
Nevertheless, the authors stress that the longer it takes for national authorities to coordinate a response to crypto, the more likely it is for regulations to be adopted elsewhere and applied in ways that don’t help, or even harm consumers in different settings.
“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation.”
The report concludes by stating that the IMF is calling for a global response that is coordinated, consistent and comprehensive.
“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.”
In as much as there are incessant calls for regulation of the crypto space by international bodies, there is a need to take cognisance of the fact of the underlying principle of the blockchain technology, which crypto is built on.
The inherent motive of the revolutionary blockchain technology is decentralisation, which is devoid of any form of policing. In view of that, any form of regulation should be a collaboration of players, stakeholders and regulators.