Cryptocurrency should not be granted legal tender status, according to the executive board of the International Monetary Fund.
The executive board – 24 directors elected by the IMF’s member countries – said the denial would “safeguard monetary sovereignty and stability”.
Discussing a board paper on Elements of Effective Policies for Crypto Assets – which provides guidance to IMF member countries on the benefits and risks of cryptoassets, and how to structure appropriate policy responses – it said “while the supposed potential benefits from cryptoassets have yet to materialise, significant risks have emerged”.
“These include macroeconomic risks, which encompass risks to the effectiveness of monetary policy, capital flow volatility, and fiscal risks [plus] serious concerns about financial stability, financial integrity, legal risks, consumer protection, and market integrity.”
High-profile collapses such as that seen at cryptocurrency exchange FTX has made cryptoasset policymaking a priority for authorities. “Doing nothing is untenable,” said the IMF board.
It continued: “Directors agreed that strict bans are not the first-best option, but that targeted restrictions could apply, depending on domestic policy objectives and where authorities face capacity constraints.
“A few directors, however, thought that outright bans should not be ruled out.
“Directors noted that regulation should be mindful not to stifle innovation, and the public sector could leverage some of the underlying technologies of crypto assets for their public policy objectives.”
Cryptocurrency shorts
Jeremy Allaire, founder and CEO of USDC issuer Circle, says the United States Securities and Exchange Commission is not the appropriate agency to regulate stablecoins. He told Bloomberg: “There is a reason why everywhere in the world, including the US, the government is specifically saying payment stablecoins are a payment system and banking regulator activity.”
The SEC continues to get crypto wrong and is extending the pain of the FTX fallout in doing so, according to Kevin Murcko of Coinmetro. “The SEC has requested that exchanges operating in the US register with the agency. The risks of crypto in the hands of illicit actors have never been clearer, but the regulators are going about consumer protection in all the wrong ways… the SEC has given next to no information about the framework they are looking to build… it has a track record of prosecuting the businesses that open their doors to them… a self-regulatory organisation appears the most suitable option.”
Meanwhile the Canadian Securities Administration (CSA) now requires crypto exchanges that plan to operate nationwide to undergo a pre-registration process within 30 days.
Galaxy Digital has invested $44 million as part of an acquisition of GK8, a cryptocurrency custody platform which specialises in cold vault technology allowing the execution of transactions without internet connectivity.
Here Not There has raised $25m in a Series A funding round led by A16z to build Towns, a Web3 solution that allows users to build decentralised online communities.
Worldwide Webb has received a $10m investment from Pantera Capital. The metaverse developer’s MMORPG (massively multiplayer online role-playing game) allows players to bring their own NFTs into the gaming ecosystem.
Crypto prices
The overall market cap of the 22,600 coins is at $1.09 trillion at the time of writing (7am UK), a 1.4% decrease in the last 24 hours.
For round-ups of recent cryptocurrency news developments, click here.
For valuations of the top 100 coins by market cap in US dollars, plus 24-hour price change, see below.