A collaborative policy roadmap released by global standard-setting organizations on Thursday has warned against the ineffectiveness of outright cryptocurrency bans. The report, commissioned by the G20 under India’s leadership, consolidates guidelines from the Financial Stability Board (FSB), the International Monetary Fund (IMF), and other international standard-setters regarding the crypto sector, media reports said.
It underscores that “comprehensive regulatory and supervisory oversight of crypto-assets should serve as a foundation to address macroeconomic and financial stability risks.”
This IMF-FSB synthesis paper is scheduled for presentation to the G20 over the weekend, marking part of a series of international efforts to establish global standards for the cryptocurrency industry, especially in response to the numerous collapses of crypto enterprises in 2022.
To address macroeconomic risks associated with cryptocurrencies, the report recommends that jurisdictions should “strengthen monetary policy frameworks, guard against excessive capital flow volatility, and establish clear tax treatment for crypto-assets.”
Thursday’s report reiterates the IMF’s position that blanket bans on cryptocurrencies may not effectively mitigate associated risks and suggests that targeted restrictions could be more beneficial, especially for emerging economies. Countries like India have expressed concerns about the heightened threat posed by widespread crypto adoption to the monetary policies of emerging economies and have called on policy bodies to propose stronger prohibitions or address these specific concerns.
Imposing blanket bans that criminalize all crypto activities, including trading and mining, in a single jurisdiction is not only costly and technically complex but also “could lead to activity moving to other jurisdictions, creating spillover risks,” according to the report. It emphasizes that “restrictions should not replace robust macroeconomic policies, credible institutional frameworks, and comprehensive regulation and oversight, which are the primary defenses against the macroeconomic and financial risks posed by crypto-assets.”
However, the report does not dismiss the possibility of all prohibitions but suggests that jurisdictions might consider targeted and temporary restrictions to manage specific risk factors during stressful periods or while they develop more effective internal solutions. The paper appears to reference instances of such restrictions, such as targeted measures against anonymity-enhancing “privacy” coins in places like Dubai and bans on Nigerian banks serving crypto firms.
“Some jurisdictions, particularly emerging markets and developing economies (EMDEs), may choose to implement additional targeted measures that exceed the global regulatory baseline to address specific risks,” it adds.
