The IMF Board of Directors considered the research “Elements of Effective Policies for Crypto Assets” (“Elements of Effective Policies for Crypto Assets”), which gave IMF member countries insight into what might be an appropriate legislative response to crypto assets, writes Reuters.
Following the collapse of numerous crypto exchanges and assets in the past few years, efforts to regulate digital assets have become a priority for authorities, the fund said.
The most important recommendation is to “preserve monetary sovereignty and stability by strengthening the monetary policy framework and not to grant official currency or legal tender status to crypto-assets.”
Criticism of IMF
The IMF criticized El Salvador in late 2021 when the Central American country became the first to adopt bitcoin as a legal tender. The Central African Republic has since adopted cryptocurrencies as a means of payment.
Another item on the list includes protecting against excessive capital inflows, adopting unambiguous tax rules and laws related to crypto assets, and establishing oversight for all participants in the crypto market.
Countries should also create international arrangements to improve oversight and enforcement of regulations and establish ways to monitor the impact of cryptocurrencies on the stability of the global monetary system, the IMF added.
Bitcoin’s rally over the past two months is winding down, a potential warning for investors if history repeats itself. The February surge of the most valuable digital coin has weakened to a level of around two percent and is fading.