IMF Chief Presses Hard on Crypto Regulations, Says It’s ‘Inevitable’ & Necessary

The International Monetary Fund (IMF) - a United Nations organization which aims to seek and foster financial stability and global monetary cooperation - has been recently quite vocal about the considering the inclusion of digital currencies in the mainstream financial system.

Last month, IMF’s Communications Director - Gerry Rice - while talking to Bloomberg said that cryptocurrencies hold the potential to establish efficient payment and settlement processes, but for this to happen, he urged global economies to come together on one platform with a greater international discussion and cooperation among regulators.

Now, pressing the regulatory button even harder, this time it is the IMF Chief Christine Lagarde who has recently said that an international regulatory action on cryptocurrencies is “inevitable” and absolutely necessary.

In her recent interview to CNNMoney, Lagarde said that the major concern of IMF is the use of cryptos for illicit activities and so before things slip out of hands it is essential to design a regulatory framework around digital currencies. Lagarde said: “There is probably quite a bit of dark activity [in cryptocurrencies]. We are actively engaging in anti-money laundering and countering the financing of terrorism. And that reinforces our determination to work on those two directions.”

Lagarde further stated that the regulatory direction should be activity-based. She said: “I believe that it’s inevitable. We clearly have to move into an activity-based regulation. Forget about the entities, work on the activities themselves: who does what and who is licensed to do what and who is properly regulated and supervised.”

Over the last year, with the tremendous growth in the popularity of cryptocurrencies, Lagarde’s stand has shifted from completely denouncing the digital currencies to seriously considering the use of cryptos in the mainstream financial system. Although she has already cautioned about the notorious use of cryptocurrencies but on the contrary, she has also asked banks that “it may not be wise to dismiss virtual currencies.”

However, much recently, owing to huge volatility in the crypto markets in the last one month, banks have started choking crypto purchases through credit cards. Moreover, in a recently held Senate hearing in the U.S, the country’s top financial bodies like the SEC and the CFTC were discussing how to bring necessary regulations and tackle the crypto volatility in the larger good of protecting the investor’s interest.

Just two weeks back at the World Economic Forum 2018 held in Davos Switzerland, leaders were seen discussing at length about the benefits of blockchain technology and its inclusion in the financial system for instant money transfers at reduced costs.