The International Monetary Fund has outlined a nine-point action plan for how nations should handle digital assets, with point number one urging against making digital currencies like bitcoin legal tender.
The document, “Elements of Effective Policies for Crypto Assets,” was addressed by the Executive Board of the global lender of last resort, according to the IMF. It offered “advice to IMF member nations on essential elements of an appropriate policy response to crypto assets.”
With the failure of several cryptocurrency exchanges and assets over the past couple of years, the fund stated that such measures have become a priority for authorities, adding that continuing to do nothing is now “untenable”.
To “safeguard monetary sovereignty and stability by improving monetary policy frameworks and do not issue crypto assets official currency or legal tender status,” was the main recommendation.
El Salvador was criticized by the IMF in late 2021 for becoming the first nation in the world to accept bitcoin as legal cash; Central African Republic afterwards followed El Salvador’s lead.
Other recommendations on Thursday’s list, which comes as G20 decision-makers gather in India, included preventing excessive capital flows, adopting clear tax regulations and laws regarding crypto assets, and creating and enforcing oversight standards for all participants in the cryptocurrency market.
Governments should also set up international agreements to strengthen supervision and enforce laws, the IMF continued, as well as measures to track crypto’s impact on the stability of the world monetary system.
IMF directors agreed that broad adoption of crypto assets “may undermine the efficacy of monetary policy, circumvent capital flow management measures, and raise fiscal risks,” as stated in the IMF’s summary of its Executive Board’s assessment.
They also “largely agreed” that crypto assets shouldn’t be recognized as official money or legal tender, and while outright restrictions on assets are “not the first-best choice,” several directors felt they shouldn’t be completely ruled out.
