IMF Executive Urges Crypto Industry To Embrace Regulations
As the clamor for comprehensive crypto regulations continues to gain traction, the IMF Director of Monetary and Capital Markets, Dong He, has called on the digital asset industry to embrace regulations.
Speaking at the Hong Kong Fintech Week on Tuesday, an International Monetary Fund (IMF) official wants the crypto industry to adopt regulatory guidelines in their dealings. As a result, Dong urges the industry to regard regulators as their “friends.”
The IMF official wants the digital asset space to work with regulators because regulation is good for the industry’s future. Furthermore, the official proposed a licensing system to include all digital asset service providers in the crypto space.
This will come with regulations that align with the risks the tokens represent. Dong calls for global collaboration to ensure a standard regulatory framework for the crypto industry.
The IMF chief wants international efforts against undue practices to prevent jurisdictions from competing for crypto business without precise guidelines. Echoing Dong’s sentiments, the Hong Kong Fintech Week panelists also commented that the crypto ecosystem should welcome regulations.
According to Christian Adderley, the head of Policy and Research at the Securities Commission of The Bahamas, crypto and the fintech industry are not contradictory to each other. However, Adderley noted that the crypto space should embrace regulation as it is akin to an endorsement from the authorities.
The official stated that:
“By meeting certain requirements set by the regulators, the digital asset industry has shown its willingness to comply.” This ensures that exchanges know the rules and the jurisdictions they operate in to enhance investors’ participation. “
IMF Sees Crypto As No Threat To Traditional Finance
The IMF noted significant concerns about the state of the global financial system due to rising inflation and a possible recession.
However, the global financial institution has reiterated that the growth of the digital financial ecosystem poses no threat to the traditional sector. According to the IMF in a previous report, crypto tokens like Bitcoin are already delinked from the conventional banking system. Thus, they have zero risk to the traditional financial system.
However, other bodies like the European Systemic Risk Board have a different view of the rising popularity of crypto assets. The agency noted that cryptocurrency poses significant risks to the broader financial market.
The IMF referenced that the crypto market crash has not impacted the traditional financial ecosystem. The market correction has plunged several crypto exchanges into bankruptcy amidst broader regulatory uncertainty.
Meanwhile, the IMF is beginning to change its view of digital financial assets due to the development of Central Bank Digital Currencies (CBDC). The body believes CBDCs can be more effective in settling payments than other payment solutions, including cryptos.
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