- IMF’s Opposition to Legalizing Cryptocurrency as a Tender
- IMF’s Pricise Action Plan
IMF’s Opposition to Legalizing Cryptocurrency as a Tender
On Friday, February 24th, the International Monetary Fund (IMF) warned its member nations against designating cryptocurrencies, i.e., BTC, as legal cash. Further, the International Monetary Fund (IMF) also released a comprehensive and concise action plan outlining ways for nations to reduce the pervasive use of cryptocurrency.
The IMF executive board recently agreed upon a guideline for cryptocurrencies; however, it does not make these assets official money or legal cash. The CEOs have endorsed this plan and highlighted its importance for preserving financial balance.
IMF’s Action Plan
The initial of the IMF’s nine proposals on digital currencies was enhancing monetary policy frameworks to guarantee financial supremacy and sustainability. However, the suggestion also stressed the significance of not designating crypto assets as official or legal currencies.
The IMF’s second suggestion was to limit extreme capital inflows and outflows instability and maintain the efficacy of capital movement management measures. The idea was to lessen any negative effects that cryptocurrency holdings might have on the sustainability of the money supply.
In its third proposal, the IMF emphasized that now to offer clear and explicit tax status for digital currencies, countries must first identify and examine the budgetary risks related to cryptocurrencies. The fourth suggestion centered on legal security for cryptocurrency holdings and addressing future legal problems.
The IMF’s fifth suggestion asked nations to establish and enforce prudential behavior and monitoring standards for all participants in the cryptocurrency market. These factors would guarantee that the market runs responsibly and securely.
The sixth proposal was that a cooperative monitoring structure is formed across various domestic agencies and authorities to monitor the cryptocurrency market better. In addition, a cooperative monitoring structure would assist in identifying and resolving any possible hazards or unlawful activity with cryptographic assets.
The 7th proposal called for establishing global cooperation networks to enhance the monitoring and execution of regulations on digital currency holdings. Finally, the eighth piece of advice included examining how digital assets impact the global financial system.
The 9th suggestion urged countries to increase their cooperation in developing virtual facilities and other options for universal finance and transactions.
The directors concurred that awarding cryptocurrency holdings the position of official money or legal currency might jeopardize financial independence and sustainability.
Governments must communicate the financial risks associated with cryptocurrencies in their budgetary risk disclosures to reduce these risks, such as potential losses to the state. Clarifying the implementation of tax systems is also crucial.
The global institution IMF acknowledged that virtual currency could improve international money transfers even if it vehemently rejects legalizing cryptocurrencies. Therefore, in hopes of enhancing international transactions and accomplishing that goal, the IMF also encouraged the development of a global system that enables the use of cryptocurrency.