IMF Managing Director Kristalina Georgieva talked about crypto regulation Saturday on the sidelines of G20 meetings for finance ministers and central bank governors under India’s presidency in Bengaluru. Commenting on crypto oversight, she told reporters:
There has to be more regulation.
Her statement followed a roundtable discussion she co-chaired with Indian Finance Minister Nirmala Sitharaman. The IMF chief and India’s finance minister agreed that besides debt restructuring, regulating cryptocurrencies is a priority area for India.
Georgieva explained that the IMF, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS) are committed to establishing a foundation for the regulation of cryptocurrencies that are not issued by governments or central banks. “We have to differentiate between central bank digital currencies [CBDCs] that are backed by the state and stablecoins, and crypto assets that are privately issued,” she stressed.
If regulation fails, if you’re slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk.
The IMF executive board provided guidance this week to help countries develop effective crypto policies. While most executive board directors agreed that “strict bans are not the first-best option, but that targeted restrictions could apply,” a few thought that “outright bans should not be ruled out.
The Fund has been against El Salvador accepting bitcoin as legal tender since the country made the crypto a national currency back in September 2021. However, the IMF said earlier this month that, so far, the risks from El Salvador adopting BTC as legal tender have not materialize.