On the sidelines of the G20 meeting in India, IMF managing director Kristalina Georgieva said the agency would prefer to regulate crypto than an outright ban.
The International Monetary Fund would prefer to differentiate and regulate crypto assets rather than enforce an outright ban, though the nuclear option will stay on the table for right now.
Speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained how the United Nations financial agency views digital assets and what it would care to see in terms of regulation.
“ We're very much in favor of regulating the world of digital money, ” and this is a top priority, she stated.
During an interview with Bloomberg published on Feb. 27, she responded to a question on her recent comments about a potential complete ban on cryptocurrencies. She said there was quietly much confusion around the classification of digital money.
“Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.”
Fully-backed stablecoins create a “ reasonably good space for the economy, ” but non-backed crypto assets are a speculative, high threat, and not money, she added.
Citing a recent paper recommending global regulation norms, she said that crypto assets can not be legal tender because they aren't backed.
Still, the option to ban cryptocurrencies “ should not be taken off the table ” if they begin to pose a greater threat to financial stability, she warned.
Nevertheless, good regulations, predictability, and consumer protection would be a better option, and banning would not need to be considered, Georgieva said.
Related: IMF exec board endorses crypto policy framework, including no crypto as legal tender
When asked what could cause the decision to ban crypto, she said that an inability to protect consumers from the rapidly evolving world of crypto assets would be the primary catalyst.
The IMF, the Financial Stability Board, and the Bank for International Settlements are jointly preparing to release regulatory framework guidelines in the other half of the year.
(MARTIN YOUNG, Cointelegraph, 2023)