Spark Global Limited reports
Amid the cryptocurrency mania, the International Monetary Fund said cryptocurrency assets pose risks to all aspects of the financial system and called on governments to closely monitor the financial stability risks posed by cryptocurrencies.
Mr. Savaldo should not have accepted Bitcoin as legal tender
In September, El Salvador became the first country to adopt Bitcoin as legal tender. In its concluding statement after concluding its regular visit and consultations with El Salvador, the IMF stated:
“Given the high volatility of bitcoin’s price, its adoption as legal tender poses significant risks to consumer protection, financial integrity and financial stability. And it can lead to financial debt.”
Given the risks associated with cryptocurrencies, El Salvador should not make Bitcoin legal tender, the IMF said. Members of the delegation suggested narrowing the scope of bitcoin’s legal use and urged greater regulation of the new payments ecosystem.
The IMF statement came two days after El Salvador’s President Nayib Bukele announced his country’s plans to build the world’s first ‘Bitcoin city,’ which would initially be funded by Bitcoin bonds, would be powered by a volcano and would levy no taxes except VAT.
Buker supports the use of bitcoin as a way to bring money into the country. He also said it would lead to financial inclusion, investment, tourism and development. Mr Buker said of the IMF statement:
“Although we have very different attitudes on some things, such as the use of Bitcoin, it is interesting for our country to have in-depth analysis on the development of Bitcoin.”
The IMF estimates el Salvador’s economy will grow by about 10 per cent in 2021 and 3.2 per cent in 2022. The Central American country’s public debt is expected to reach 85 percent of GDP by the end of 2021.
India may allow trading of cryptocurrencies
In India, details of a comprehensive bill on cryptocurrencies are being hammered out, likely to be submitted for approval in the winter session of parliament, which starts on November 29. The bill would ban payments using cryptocurrencies, but would allow and regulate their trading as assets, sources said. The bill appears to have reversed a previous plan to ban cryptocurrencies in India.
In contrast, Gerry Rice, a spokesman for the IMF, said that global agencies believe crypto assets pose risks to various aspects of the financial system, including operational stability, financial integrity, investor protection and the environment. So far, the IMF has not found that financial stability risks are systemic at the global level, but they are increasing and countries should monitor crypto assets closely.
He said policy makers should monitor the rapidly growing crypto sector by developing data standards and strengthening crypto asset reporting requirements:
“We reiterate our overall position on crypto assets. National regulators should give priority to implementing these global standards. Those developed by the Financial Action Task Force and the Financial Stability Board. Where standards are not yet in place, regulators should rely on and complement existing tools to control risks, especially the exposure of funds, exchanges and financial institutions.”
Given the cross-border dimension of crypto assets, Rice also noted that regulators should strengthen cross-border coordination on crypto assets supervision and enforcement actions. International collaboration is key to preventing and minimizing potential domestic policy leaks and cross-border regulatory arbitration.
Within India, opinions are divided on whether to regulate crypto assets, and the RBI has been a staunch opponent of cryptocurrency trading.
Last week, RBI Governor Shaktikanta Das reiterated the central bank’s serious concerns about financial stability due to the growing risks of cryptocurrencies, calling for a “deeper and more comprehensive” discussion on the issue.
Earlier this month, Indian Prime Minister Narendra Modi hosted a high-level meeting to discuss cryptocurrencies and other related issues, and urged cooperation among the world’s democracies to ensure cryptocurrencies like Bitcoin don’t “end up in the wrong hands.”
article links：The IMF warns against using bitcoin as legal tender
Reprint indicated source：Spark Global Limited information