A recent International Monetary Fund (IMF) study revealed that crypto bans lack an effective and sustainable long-term solution. The IMF official identified gaps in crypto demands that must be addressed rather than implementing restrictive approaches to crypto assets bans.
The IMF compiled its findings into a synthesized document outlining the critical crypto demand drivers. The market regulators noted that crypto firms needed to gather crucial information on the user needs in digital payment platforms. They mentioned the need to improve the transparency of payment methods.
Scope of IMF Study
Additionally, the IMF recommended capturing crypto transactions in the national statistics to ease the monitoring of demand and traffic. The IMF’s recent research supports a study conducted by Chainalysis which illustrated positive crypto adoption in Latin America.
The Chainalysis report stated that Brazil, Argentina, Colombia, and Ecuador are among the top twenty countries with high crypto adoption. As per the analyst report, the four countries have garnered enormous benefits from digital assets.
Interestingly Chainalysis noted that the pro-crypto countries had utilized cryptocurrency to address macroeconomic pressures. It was reported that crypto adoption had improved financial inclusivity for the unbanked population.
Also, crypto technologies have been used to improve the payment system to be more convenient and affordable.
Benefits of Crypto Adoption
A few days ago, the regulatory agencies in Argentina adopted restrictive measures on any crypto purchases that will be made through banks. The latest regulatory action in Argentina has sparked heated debates among investors, businesses, and scholars. Some users requested the regulators to clarify whether the approach would be practical.
A scrutiny of the anti-crypto countries revealed that regulators had implemented measures to sustain financial stability, reduce tax cheats, address corruption, and anti-money laundering cases. Other countries have agreed to ban crypto to strengthen the value of the local currency.
Despite the crypto ban in specific jurisdictions, IMF official still believes that crypto regulation will provide comprehensive and sustainable solutions to address the risk associated with digital assets.
Reflecting on the IMF report, the officials observed that twelve out of nineteen study areas in Latin America have a regulatory framework while the rest are formulating the crypto regulations. They concluded that crypto regulation assists in minimizing the risks of digital assets.
The IMF report underscored the need for adopting clear regulations on crypto assets. They argued that having regulatory clarity, it was easy to reduce illicit activities. The Bretton Woods institution highlighted that crypto regulation supports restoring customers’ and investors’ trust by providing a clear and transparent guidelines that firms must follow.
Why is Crypto Regulation Importance?
Besides formulating and implementing effective crypto regulation, the IMF team outlined the benefits of strengthening international cooperation among the regulatory agencies. They stated that developing solid international cooperation encourages knowledge sharing, which is crucial in implementing crypto regulation.
Recently the Financial Action Task Force (FATF) joined hands with the G20 group to create a unique platform to encourage the legislative bodies to collaborate more effortlessly. The regulators mentioned that regulation plays a crucial role in stimulating the growth of digital assets and innovation.
However, the regulators are tasked to evaluate how to address digital asset risk and the practical mechanisms that will foster technological development. According to the IMF, a suitable regulatory framework should encourage innovation. This will be achieved by providing regulatory clarity and developing a friendly business environment that encourages firms to explore innovative solutions in the blockchain and crypto sectors.
Beyond this, the IMF team mentioned the benefits of educating the public on crypto technology. Through public education, the IMF noted it was easy to explore the benefits and risks of digital assets. They argued that it was easy to address fraudulent schemes by providing the community with financial literacy learning.
The IMF stated that despite the growth of the global regulatory framework implementing crypto bans fails to provide long-term solutions.
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