The International Monetary Fund (IMF) is calling for international cooperation on cryptocurrencies as it cautioned against the risk of the extreme bull runs late last year. The IMF is an institution in the United Nations system that aims to foster global monetary cooperation, secure financial stability and reduce poverty around the world.
In an interview with Bloomberg, IMF spokesperson Gerry Rice said, “Greater international discussion and cooperation among regulators, yes, would be helpful.”
Although Rice did not reveal what type of coordination is required, the answer must have something to do with stabilizing the price of cryptocurrencies, which is notoriously known for its wild fluctuations. As digital currencies such as Bitcoin become an investment phenomenon and household name, there is also a large influx of ‘dumb’ money poured in by uneducated mainstream investors, who are seeing unpredictable gains and losses due to the volatile market.
Rice also addresses this issue in his statement:
“When asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy. It’s important for people to be aware of the risks and take the necessary risk-management measures.”
According to the spokesperson, the risks that cryptocurrencies pose to the current financial system extends beyond investors’ losses – it also covers areas such as money laundering, terrorist financing, tax evasion and fraud.
Treasury Stands by The IMF
The IMF is not the only organization urging for more global coordination on the subject of cryptocurrencies. Last week, Treasury Secretary Steven Mnuchin called for the group of 20 nations (G20) to prevent digital currencies from joining the ‘dark side’ and becoming the digital equivalent of an anonymous Swiss Account. It is obviously in the U.S.’s best interests that “bad people cannot use these currencies to do bad things.”
Last week, Mnuchin announced that the Financial Stability Oversight Council has formed a working group to carry out discussion with other U.S. regulators. The group is “very focused” on cryptocurrencies, he said at the time.
While cryptocurrencies have the potential to better the current financial system with its fast transaction speeds and zero-to-nothing fees – without having to worry about international borders – there are still a lot of limitations present in most major cryptocurrencies. Although complete decentralization is what most coins are striving to accomplish, perhaps some form of regulation is the only way cryptocurrencies and most of the governmental bodies in the word can come to a compromise and live together in peace.
FEATURED IMAGE COURTESY OF United States Mission to the United Nations