Global financial regulators stated in a recent report that although cryptocurrency use should be limited rather than outright prohibited since it can be risky to the global financial system and has not yet demonstrated itself to be anywhere close to as useful as proponents promise.
Prior recommendations from two significant financial agencies and other standard-setting bodies have been compiled into a list of suggested actions for national governments to take in order to accommodate digital currencies while guarding against the risks they pose at the request of India, which is currently the president of the Group of 20 leading industrial and developing economies.
These five ideas from the Financial Stability Board and the International Monetary Fund are very intriguing:
- Due to risks and worries about destabilizing effects on the global monetary system, crypto-assets should not be designated as official currency or legal tender, and central banks should refrain from holding them in their official reserve assets.
- For effective tax compliance, tax policies should guarantee that crypto-assets are treated in a clear manner. Additionally, authorities should work together on cross-border information sharing and financial regulation.
- Authorities should exercise their authority in accordance with international norms and in proportion to the risks created by crypto-asset activity. Additionally, jurisdictions were urged to update or make clear any outdated laws that apply to how crypto assets should be treated.
- Crypto-asset data should be collected, stored, protected, and reported promptly and accurately. As necessary, authorities should have access to this data.
- Global stablecoin issuers and pertinent parties should give market participants thorough and clear information so they can comprehend how each token works. Authorities should mandate that all users of stablecoins have a strong legal claim against the issuer and/or the underlying collateral, and timely redemption should be ensured.
