One of the world’s largest financial institutions is scrambling to deal with the fast approaching reality of the cryptocurrency world.
The International Monetary Fund (IMF) has made a new push for world governments to regulate cryptocurrency as the technological tidal wave takes hold.
The volatility that comes with such new technology has worried many traditional economists and existing banks. Many over-eager investors have learned the hard way how quickly online markets can change – sometimes behind something innocuous like a tweet – and lost thousands of cash.
The logic of regulation centers around a bid to protect vulnerable investors. However, the most staunch free-market advocates in the crypto sector believe that it is this lack of policy that gives this phenomenon so much potential.
The IMF is most definitely in the former camp, as it calls on governments to work together on broader regulations as banks face increasing pressure to adopt cryptocurrencies.
“There is an urgent need for cross-border cooperation and collaboration to address technical, legal, regulatory and supervisory challenges,” the organization said in a statement on Friday.
IMF wary of potential cryptocurrency Traditional barriers between countries tend to be bypassed, warning that a “borderless” payment system could soon become a problem for those in power, who have the responsibility to manage economic systems.
The statement continued, “Crypto’s cross-sector and cross-border remit limits the effectiveness of the national approach.” “Countries are taking very different strategies, and current laws and regulations may not allow for a national approach that comprehensively covers all elements of these assets.
“Importantly, many crypto service providers operate across borders, making the task of supervision and enforcement more difficult. Unorganized regulatory measures can potentially facilitate volatile capital flows.”
Now, after years of cryptocurrency, banks and governments have begun to acknowledge the undeniable juggernaut. According to Sydney Morning HeraldIn response to what has been the biggest year ever in cryptocurrency development, the Reserve Bank of Australia (RBA) is “tempting the adoption of its electronic assets”.
RBA Governor Philip Lowe remains a staunch skeptic and an advocate of stronger regulation, warning the public about “uncertainty about the long-term usefulness of these assets.”
Dr Lowe also doubts that consumers will ever replace using fiat currency with crypto assets for day-to-day payments, again questioning the volatility and overall value of the new technologies.
It is worth noting that at the time of writing, bitcoin is sitting at $A67,104 per coin, more than three times its year-over-year value.
“To date, we have not seen a strong public policy case to move in this direction, especially given Australia’s efficient, fast and convenient electronic payment system,” Dr Lowe said this week.
“Relevant considerations here include utility for the end users of the underlying payment functionality, the safety of the money invested, price volatility, the stability of the intermediaries used and the ultimate support of the asset – not to mention significant energy consumption. To conduct transactions using certain crypto assets.
“However, it is possible that a matter of public policy could emerge very quickly as technology develops and consumer preferences change. It is also possible that these tokens are a lower-cost solution for certain types of payments than existing technologies. can present.”
Treasurer Josh Frydenberg is due to announce a series of regulatory and tax proposals covering digital wallets in the coming weeks.
The move reportedly includes the introduction of a central bank digital currency, which the treasurer says will put Australia at the cutting edge of the global fintech economy.
“For consumers, these changes will establish a regulatory framework to reduce the increased use of crypto assets and clarify the treatment of new payment methods.” They said, “As more Australians use these technologies and invest in these digital assets, it is vital that a strong regulatory regime eases their interactions.”
However, the ongoing effort by existing financial institutions to squeeze the crypto genie back into the bottle has attracted heavy criticism from blockchain advocates, who believe that the revolutionary technology will provide a more efficient and ethical platform for individuals to control their funds. can do
For many, the cryptocurrency is still in its infancy and attempts to centralize it will tarnish its potential as a game-changing platform for commerce in the coming decades.
Former IMF chief Simon Johnson said that the “jury is still out” regarding cryptocurrency, which has really only existed as a payment system for a decade.
“I think we’re all still waiting for a defining event that really draws people’s line of thinking,” he said.