BENGALURU: Blanket bans making all crypto-asset activities (trading and mining) illegal can be costly and not an easy option, says the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in a Synthesis Paper.
This paper, released on Thursday, will be submitted to G20 members this weekend. As per the paper, targeted restrictions could be justified to manage specific risks for resource-constrained authorities or to support regulatory frameworks.
The collective recommendations provide comprehensive guidance to help authorities address the macroeconomic and financial stability risks posed by crypto asset activities and markets, including those associated with stablecoins and those conducted via so-called decentralised finance (DeFi). “The emergence of clear risks necessitates appropriate policy responses. While crypto assets are not yet a significant part of the global financial system, they have the potential to emerge as a source of systemic risk in specific jurisdictions if they gain traction for payments or retail investments,” it said.
The paper said developing effective frameworks and policies is the best way to limit substitution into crypto assets. Governments should minimise fiscal and operational risks in cases of official crypto asset use. Official payment use should be limited to avoid exposing government revenues to variations in crypto asset prices, it added.
Crypto players say these recommendations are a significant leap forward in establishing a comprehensive regulatory framework. “Firstly, it talks about the macroeconomic and financial stability risks associated with cryptocurrencies. Secondly, the report suggests that the emerging markets and developing economies (EMDEs) may choose to implement targeted measures beyond the global regulatory baseline to address specific risks giving them liberty,” said Edul Patel, CEO & co-founder of Mudrex, a crypto investment platform.
“Licensing structure for crypto asset service providers is something Japan, South Korea and some others have proactively implemented; India could now consider a similar regime,” said Ashish Singhal, co-founder and CEO, CoinSwitch.