IMF Banning crypto may not be effective long-term.
The International Monetary Fund (IMF) has reiterated its calls for the regulation of cryptocurrencies in certain countries, but believes that an outright ban may not be the best approach.
In a report on Latin America and the Caribbean published on June 22, the IMF highlighted various approaches taken by local governments in addressing the adoption of cryptocurrencies and central bank digital currencies (CBDCs). El Salvador has accepted Bitcoin (BTC) as legal tender since September 2021, while the Bahamas was the first country to launch its own CBDC, the Sand Dollar, in October 2020.
The IMF stated that Brazil, Argentina, Colombia, and Ecuador, whose governments’ regulation of cryptocurrency was “in progress,” ranked among the highest countries in the world for the adoption of digital assets, in an effort to help the unbanked population, enable faster and cheaper payments, and more. Additionally, according to the IMF, most central banks in the region “have or are considering adopting digital currencies.”
Related: IMF envisions ‘new class’ of cross-border payment platform with single ledger
“If well designed, CBDCs can strengthen the usability, resilience, and efficiency of payment systems and increase financial inclusion in [Latin America and the Caribbean],” said the IMF. “While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run. The region should instead focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics.”
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The IMF has often made public statements opposing countries adopting cryptocurrencies as legal tender. On June 19, its director of the monetary and capital markets department, Tobias Adrian, proposed a payment system that used one ledger to record CBDC transactions — an idea that received harsh criticism from many in the crypto space.
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