Joint IMF and FSB Report Warns Against Total Crypto Bans

A joint report from the IMF and the Financial Stability Board (FSB) has urged global regulators to refrain from using heavy-handed approaches in regulating the crypto industry. The FSB is an international body that monitors and makes recommendations about the global financial system, while the IMF is an organization that promotes global economic cooperation among its member countries.

The report, titled “A Framework for Global Stablecoins: A Report of the FSB and the IMF”, argues that blanket bans, categorical prohibitions, and overly prescriptive requirements should not be used in the regulation of digital assets. Instead, regulators should focus on how digital assets interact with the traditional financial system in order to ensure a well-functioning and secure financial system.

The report recognizes the potential of digital assets to improve the efficiency of payments, as well as to finance innovation through new financing models. To ensure the growth of the industry in a safe and sustainable way, the FSB and IMF outline four policy objectives. These include promoting consumer protection, financial stability, healthy competition, and anti-money laundering/combating the financing of terrorism (AML/CFT).

The FSB and IMF also suggest that regulators focus on requiring developers of digital asset platforms to guarantee principles related to sound governance and robust risk management. The framework also proposes that regulators evaluate how cryptocurrencies interact with the existing financial system and analyze whether cryptocurrencies represent a threat to any of its goals, such as protecting consumer data privacy.

Finally, the report recommends that regulators collaborate across jurisdictions to share best practices, enhance innovation, and ensure global consistency in the regulation of digital assets. It also urges greater coordination between international organizations, such as the IMF, the FSB, the Financial Action Task Force (FATF), and the Basel Committee on Banking Supervision, in order to develop and enforce consistent international standards.

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