World governments should not grant cryptocurrency legal tender status, the International Monetary Fund’s (IMF) executive board said in its new nine-point action plan on how countries should approach crypto assets published Thursday.
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- “Directors generally agreed that crypto assets should not be granted official currency or legal tender status in order to safeguard monetary sovereignty and stability,” the statement said, urging countries to strengthen and clarify crypto tax policy and align with international standards.
- Earlier this month, the IMF’s 24 directors, who are elected by the organization’s member countries, were presented with a staff paper that warned of crypto’s risks to monetary policy, tax collection, financial stability, and consumer protection.
- According to the plan, banning crypto is “not the first-best option,” and regulators should avoid stifling the innovation coming from the industry. However, directors agreed that targeted restrictions could apply to limit crypto risks, while some board members thought “outright bans should not be ruled out.”
- “The growing adoption of crypto assets in some countries, the extra-territorial nature of crypto assets and its providers, as well as the increasing interlinkages with the financial system, motivate the need for a comprehensive, consistent, and coordinated response,” the statement added.
- The IMF has expressed concern about cryptocurrencies being used to evade capital controls imposed by governments. It also discouraged countries from making Bitcoin (BTC) the legal currency of their country, such as in the case of El Salvador.
- India, the current holder of the G20 presidency, has been working with the IMF and other international bodies to develop a regulatory framework for cryptocurrencies, according to statements from the nation’s Department of Economic Affairs Secretary Ajay Seth earlier this month.
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