The International Monetary Fund’s nine-point action plan for handling crypto assets includes a first suggestion for countries to avoid designating cryptocurrencies like bitcoin as legal tender.
The IMF’s Executive Board discussed a paper titled Components of Effective Policies for Crypto Assets, which gave guidance to IMF member nations on the essential elements of an acceptable policy response to crypto assets.
As several cryptocurrency exchanges and assets collapsed over the past couple of years, the fund stated that such activities have become a priority for authorities and that continuing with nothing would now be untenable.
The top proposal was to enhance monetary policy frameworks to protect monetary sovereignty and stability and not to award crypto assets official currency or legal tender status. The IMF lashed out at El Salvador in late 2021 after the Central American country became the first to accept bitcoin as legal cash, a decision that the Central African Republic has since emulated.
Additional recommendations on the February 23 list, which comes as G20 leaders gather in India, included avoiding excessive capital flows, establishing clear tax rules and laws governing crypto assets, and implementing and enforcing supervisory standards for all crypto market participants.
Governments should also adopt international agreements to improve the monitoring and enforcement of legislation as well as methods to monitor crypto’s impact on the global monetary system’s stability, according to the IMF.
The IMF’s Executive Board appreciated the ideas and recognized that the broad use of crypto assets might weaken monetary policy effectiveness, evade capital flow management measures, and raise fiscal concerns.
They also largely agreed that crypto assets should not be designated as official currency or legal tender, and while tight asset bans are not the best choice, a few directors believe they should not be ruled out.
