Gita Gopinath, the chief economist at International Monetary Fund (IMF), has said that countries should regulate cryptocurrency instead of banning it. Moreover, Gopinath has asked for standard global policies to control digital assets as they create difficulty for upcoming markets.
Gopinath says the ban will not be effective
Gopinath was speaking at a National Council of Applied Economic Research (NCAER) event, where she explained that cryptocurrency has a few benefits like decentralized technology. For this reason, it was essential to regulate the sector instead of banning it.
The executive added that crypto assets could be vital for developing and emerging economies. Moreover, since most exchanges are offshore, people still trade them despite a ban. Gopinath believes that cryptocurrency is too complex for a single country to regulate on its own hence the need for global cooperation.
Gopinath stated that countries would have to overhaul most existing transactions laws because of cryptocurrency. On January 21, 2022, Gopinath will become the IMF’s First Deputy Managing Director.
The IMF has proposed a framework to regulate cryptocurrency
Gopinath’s call to action follows the IMF’s recent guidelines for a framework that would make controlling the crypto space standard. The IMF believes that global regulations should give all parties a level playing field.
The IMF has suggested that countries make regulations according to the use of cryptocurrency and stablecoins. For example, securities regulators should deal with products and services for investment the same way they deal with securities dealers and brokers.
The IMF also believes that the payments authority oversight or the central bank should deal with products and services for payments as they would banks deposits.
It also states that crypto assets could change the financial and internal monetary system drastically. The IMF’s suggestion ensures innovation in the crypto space while protecting investors.
The regulator has approached the growth of cryptocurrency skeptically and pointed out that the industry presents a threat to international financial stability. Moreover, the IMF believes the relevant authorities should protect crypto investors.
The IMF warned other countries not to legalize Bitcoin like El Salvador. This warning comes as other countries in South America consider making digital currency a legal tender.