The International Monetary Fund (IMF) has stated its preference for regulating cryptocurrency assets instead of enforcing an outright ban. The agency’s managing director, Kristalina Georgieva, made the remarks at the G20 finance ministers meetings in Bengaluru, India.
Georgieva explained that the IMF is in favor of regulating the world of digital money and that it is a top priority. She stressed the need to differentiate between central bank digital currencies backed by the state and publicly issued crypto assets and stablecoins.
Fully-backed stablecoins are considered a “reasonably good space for the economy,” while non-backed crypto assets are speculative, high risk, and not money.
In a recent paper recommending global regulatory standards, the IMF stated that crypto assets cannot be legal tender because they are not backed.
Nevertheless, Georgieva warned that the option to ban cryptocurrencies “should not be taken off the table” if they begin to pose a greater risk to financial stability. However, she emphasized that good regulations, predictability and consumer protection would be a better option, and banning would not need to be considered.
According to Georgieva, an inability to protect consumers from the rapidly evolving world of crypto assets would be the primary catalyst for banning them. The IMF believes that regulation is necessary to protect consumers and promote a healthy economy.