Global financial regulators, in conjunction with the International Monetary Fund (IMF), unveiled a comprehensive roadmap on Thursday, delineating strategic measures aimed at safeguarding macroeconomic and financial stability from the potential destabilizing effects of cryptoassets. The risk monitoring body of Financial Stability Board, G20, in collaboration with the IMF, issued a whitepaper underscoring noncompliance with existing regulatory frameworks as a critical risk factor heightening the susceptibility of cryptoassets.
Furthermore, the paper underscored that the purported advantages of cryptoassets, including swifter and more cost-effective cross-border transactions, along with enhanced financial inclusivity, have yet to materialize. The paper emphasized, “Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability.”
The document outlines specific timelines for member nations of the IMF and G20 to implement the recommendations put forth by the Financial Stability Board and the International Organization of Securities Commissions (IOSCO), a global consortium of securities regulators. This marks a significant shift in regulatory philosophy following last November’s tumultuous collapse of the FTX crypto exchange, which reverberated through financial markets, leaving investors facing substantial losses.
According to the paper, “A comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability.” This framework is slated to be presented to G20 leaders during an upcoming summit in New Delhi later this month. Presently, the regulatory landscape governing the sector remains marked by inconsistencies, although the European Union has already greenlit the world’s inaugural comprehensive set of regulations pertaining to cryptoassets.
Additionally, the paper advises prudence in averting sizable deficits, as they can lead to inflation, which in turn fosters the proliferation of cryptoassets as substitutes. Furthermore, the document advocates for a clear delineation of tax policies pertaining to cryptoassets.
In essence, this collaborative effort between the G20 and the IMF signifies a pivotal stride towards not only shielding stability from the potential threats posed by cryptoassets, but also furnishing global leaders with the requisite information for making well-informed decisions. The unveiled roadmap embodies a collective commitment to fortifying the financial framework against the evolving dynamics of the cryptocurrency landscape.