The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one being a plea not to give cryptocurrencies such as bitcoin legal tender status.
The global lender of last resort said its Executive Board discussed the “Elements of Effective Policies for Crypto Assets” document, which provides “guidance to IMF member countries on key elements of an appropriate policy response to crypto assets.”
Such efforts have become a priority for the authorities, the fund said, following the collapse of a number of crypto exchanges and assets in the past few years, adding that doing nothing was now “unsustainable”.
The main recommendation was to “protect monetary sovereignty and stability by strengthening monetary policy frameworks and not to grant crypto-assets the status of official currency or legal tender”.
The IMF attacked El Salvador in late 2021 when the Central American country became the first to adopt bitcoin as legal tender, a move that has since been copied by the Central African Republic.
Other advice on Thursday’s list, which comes as G20 decision-makers meet in India, included safeguarding against excessive capital flows, adopting clear tax rules and laws regarding crypto assets, and developing and enforcing oversight requirements for all crypto market players.
Countries should also establish international arrangements to strengthen oversight and enforcement of regulations, the IMF added, as well as set up ways to monitor the impact of cryptocurrencies on the stability of the global monetary system.
In an assessment of its executive board, the IMF said directors welcomed the proposals and agreed that widespread adoption of crypto-assets “could undermine the effectiveness of monetary policy, circumvent measures to manage capital flows and exacerbate fiscal risks.”
“They also generally agreed that crypto-assets should not have the status of official currency or legal tender, and while strict asset bans are not the “first best option”, several directors thought they should not be excluded.
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