Cryptocurrency should not be granted legal tender status, according to the executive board of the International Monetary Fund.
The executive board – 24 directors elected by the IMF’s member countries – said the denial would “safeguard monetary sovereignty and stability”.
Discussing a board paper on Elements of Effective Policies for Crypto Assets – which provides guidance to IMF member countries on the benefits and risks of cryptoassets, and how to structure appropriate policy responses – it said “while the supposed potential benefits from cryptoassets have yet to materialise, significant risks have emerged”.
“These include macroeconomic risks, which encompass risks to the effectiveness of monetary policy, capital flow volatility, and fiscal risks [plus] serious concerns about financial stability, financial integrity, legal risks, consumer protection, and market integrity.”
High-profile collapses such as that seen at cryptocurrency exchange FTX has made cryptoasset policymaking a priority for authorities. “Doing nothing is untenable,” said the IMF board.
It continued: “Directors agreed that strict bans are not the first-best option, but that targeted restrictions could apply, depending on domestic policy objectives and where authorities face capacity constraints.
“A few directors, however, thought that outright bans should not be ruled out.
“Directors noted that regulation should be mindful not to stifle innovation, and the public sector could leverage some of the underlying technologies of crypto assets for their public policy objectives.”