In a joint roadmap published today, global standard-setting bodies including the Financial Stability Board (FSB) and the International Monetary Fund (IMF) warned that a complete ban on cryptocurrencies was unlikely to reduce the associated risks.
Global Financial Institutions Claim Broad Crypto Bans Are Ineffective
The comprehensive report, commissioned by the India-led G20 forum, highlights the need for comprehensive regulatory and supervisory oversight to address macroeconomic and financial stability risks posed by crypto assets.
Countries such as India have expressed concern about the increasing threat to monetary policy from widespread crypto use in such economies, calling for recommendations on stronger bans or specific regulatory measures.
The report also touches on concerns about the proliferation of stablecoins, which are cryptocurrencies pegged to the value of other assets or currencies.
The report underlines that although stablecoins can facilitate a variety of transactions, they bring with them different risks, especially in terms of maintaining a stable value and dependence on private issuers.
The report highlights that imposing blanket bans on all crypto activities in one jurisdiction, including trading and mining, is not only logistically difficult and costly, but also risks creating spillover risks by diverting crypto-related activities to other jurisdictions.
The report emphasizes that restrictions should not replace sound macroeconomic policies, strong institutional frameworks and comprehensive regulation and oversight.
*This is not investment advice.