The opinions expressed are those of the authors and do not necessarily represent the views of the IMF and the Executive Board.
The purpose of the IMF is to protect the security of the global financial and monetary system, and crypto-assets are a physical exchange.
By Tobias Adrian, Dong He and Aditya Narain
Crypto assets and related products and services have grown rapidly in recent years. Links to financial management continue to grow. Lawmakers have struggled to deal with the risks of this transition, which includes many unregulated operations. Indeed, some countries believe that these financial security risks can be dealt with quickly.
Contradictory policies can lead to capital disruptions.
A market capitalization of around $2.5 trillion represents the importance of the market for the development of technologies such as blockchain, but this may also affect the measurement lag bubble. Indeed, the first reaction to the Omicron variant included significant cryptocurrency sales.
Financial risk due to Crypto Assets
Pricing is not the only challenge in the crypto ecosystem. Assessing, monitoring and managing risk challenges regulators and businesses. These include, for example, operational and financial risks associated with the exchange of crypto assets and wallets, investor protection, insufficient and incorrect oversupply of certain stablecoins. Additionally, the emergence of crypto in emerging markets and developing countries may make us call it “crypto”. It is time for these assets to displace domestic gains and cross exchange rate constraints and quantify governance.
These risks reflect the need for a global standard that addresses all financial risks in crypto devices, interfering with ecosystems and other industries, when permitted for the environment of valuable cryptocurrency products and applications. .
The Financial Security Council, in its joint role, should set global standards for the management of crypto assets. The goal is to provide a holistic and integrated approach to financial security and business behavior risk management that can be applied consistently across multiple decision-making processes. . Crypto operations and cross-border transactions limit the benefits of domestic operations. Countries have very different ideas and existing laws and regulation will not allow for a national approach that includes all of these strengths. It is important to note that many crypto providers operate across borders, which makes monitoring and management more difficult. Contradictory policies can lead to capital disruptions.
The design-body covers different products and industries offering different directions. For example, the Financial Action Task Force has issued guidance for a risk-based approach to mitigating financial integrity risks from virtual assets and their service providers. Actions by other standard-setting bodies range from broad principles for some types of crypto assets to rules for mitigating exposure risks of regulated entities and setting up information exchange networks. While useful, these efforts aren’t sufficiently coordinated towards a global framework for managing the risks to financial and market integrity, financial stability, and consumer and investor protection.