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IMF Chief Urges To 'fight Fire With Fire' In Crypto Dealings


International Monetary Fund Chief Christine Lagarde urged authorities around the world to develop regulatory frameworks to meet the new vulnerabilities created by the rapid growth of crypto-assets.

In an IMF blogpost titled "Addressing the Dark Side of the Crypto World", Lagarde called to "fight fire with fire" while dealing with digital currencies. "Since crypto-assets know no borders, the framework to regulate them must be global as well."

According to her, technology behind these assets, including blockchain, could help revolutionize fields beyond finance, but failure to control it could result in a potentially major new vehicle for money laundering and the financing of terrorism.

Also, better use of data by governments can help free up resources for priority needs and reduce tax evasion, including evasion related to cross-border transactions.

The Financial Stability Board or FSB is considering new rules to meet the advancements in fintech, while the Financial Action Task Force or FATF, which sets standards for the fight against money laundering and terrorist financing, has already issued useful guidance to countries on how to deal with cryptocurrencies and other electronic assets.

IMF for the past 20 years has been working to stop money laundering and combat terrorist financing, and has conducted 65 assessments of countries' regulatory frameworks and provided capacity development assistance to 120 countries, she said.

The crypto-asset transactions, typically built in a decentralized way and without the need for a central bank, create an element of anonymity, much like cash transactions.

The rapid growth of crypto-assets, the extreme volatility in their traded prices, and their ill-defined connections to the traditional financial world could easily create new vulnerabilities, Christine Lagarde said.

She added that the authorities need to make sure that the same rules apply to protect consumers in both digital and non-digital transactions.

"We can begin by focusing on policies that ensure financial integrity and protect consumers in the crypto world just as we have for the traditional financial sector."

by RTT Staff Writer

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