- The two institutions called for a common regulatory framework on digital assets during the G-20 meeting.
- G-20 officials feel that crypto carries critical risks to demand a comprehensive rulebook.
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The world is edging closer to having global standards for crypto regulation, according to the International Monetary Fund (IMF) and the Financial Stability Board (FSB). An announcement by the Indian Finance Minister Nirmala Sitharaman made on February 25 revealed.
A joint synthesis paper by the two institutions outlined the potential crypto rule framework, coming after a three-day meeting by the G-20 in Bangalore, India. The group had made a global regulatory framework a priority after years of delayed action against the fast-growing crypto sector.
IMF and FSB will generate suggestions and produce papers regarding the regulation, oversight, and supervision of crypto activities. The papers will form the basis for developing a comprehensive policy on crypto in light of the sector risks and the macro and regulatory environments. The FSB is expected to provide recommendations on the matters in July.
The institutions will submit the synthesis paper in September, during India’s G-20 presidency. The paper will integrate the regulatory and macro-financial perspectives of cryptocurrencies. In the meeting, the IMF will also report on the impacts of central bank digital currencies (CBDCs).
Crypto risks call for a comprehensive and consistent regulatory framework
The latest development comes amid calls for comprehensive and coordinated regulation in the crypto sector. In its December 2021 report, the IMF warned that uncoordinated regulatory measures in crypto could destabilize global capital flows.
The need for global consensus in the potential crypto framework was underlined in Sitharaman remarks. “The World Bank stated that views of all developing countries should also be included in any (crypto) policy framework.” Sitharaman further stated there are ongoing study processes for “informed discussions.”
During the G-20 meeting, there was a consensus that crypto carries critical risks, calling for coordinated regulatory action. Quoting Canada’s central bank governor, Sitharaman warned against a “regulatory seal of approval” of any crypto asset without a clear thought.
India’s central bank governor Shaktikanta Das stated that the FTX exchange collapse reawakened G-20 countries’ perception of crypto assets. Das says there is now a wider consensus regarding the risks posed by cryptocurrencies.
The US Treasury Secretary Janet Yellen has also called for a robust crypto regulatory framework during the concluded meetings. She still insisted that the US is not advocating for a total ban on crypto activities, a position also echoed by the IMF managing director Kristalina Georgieva.
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