IMF Chief Christine Lagarde Says ‘Fight Fire With Fire’, Track Cryptos Using Blockchain

While cryptocurrencies have certainly set a new parallel in the world of global financial economy, it decentralized way of functioning also has a dark side to it. Time and again several finance professionals and blockchain tech enthusiasts have expressed concerns over the use of digital currency for illicit activities of money laundering and terror funding.

While government bodies across the globe are trying to nip this matter in the bud, they have yet to arrive at a holistic solution to this. Yesterday, putting up a straight message, IMF Chief Christine Lagarde has called on a crackdown to track cryptocurrencies to “fight fire with fire”. Lagarde said that regulatory should start using the same blockchain technology to curb "peril that comes along with the promise" of digital currencies.

In an IMF blog post, Lagarde writes: "The same innovations that power crypto-assets can also help us regulate them. To put it another way, we can fight fire with fire. We can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.”

Lagarde has once again raised concern and alarmed over the growing financial instability that digital currencies can bring, especially due to its increasing use in money laundering and terror funding activities.

Lagarde said that the Distributed Ledger Technology (DLT) itself can be used in order to speed up information sharing within regulators and thus improve the monitoring of the global financial system. She further added that “Those who have a shared interest in maintaining safe online transactions need to be able to communicate seamlessly. The technology that enables instant global transactions could be used to create registries of standard, verified, customer information along with digital signatures. Better use of data by governments can also help free up resources for priority needs and reduce tax evasion, including evasion related to cross-border transactions.”

Lagarde also proposed to use other core technologies like artificial intelligence, biometrics, and cryptography which can help us “remove the “pollution” from the crypto-assets ecosystem” and thus enhance the digital security while identifying suspicious transactions in close to real-time.

Lagarde has also mentioned that inform laws catering to both - digital and non-digital transactions should be made. This will help in order to increase the transparency and alert buyers against any potential risks involved.
Last month, the chief clearly said that regulations in cryptocurrencies are absolutely ‘Necessary and Inevitable’ if we want to maintain the strength of the global financial system. Lagarde also reiterates her stand saying countries from around the world should come together to address this issue as “no country can handle this challenge alone.”

Earlier year while talking at the World Economic Forum 2018, Lagarde has sought for global cooperation to establish a system procedure to deal with digital currencies.