It has been more than a decade since the launch of the first-ever cryptocurrency but still, there is no comprehensive set of regulations for Bitcoin or Altcoins. In most of the world, there are no regulations at all. On the other hand, different countries have implemented different kinds of rules because some countries have given them the status of CBDCs while others have banned them. In this regard, IMF (International Monetary Fund) has asserted that fragmentation is not viable under the present circumstances.
According to IMF, the delay in comprehensive and global crypto regulations is making the situation worse. A recent blog post by IMF has urged the world to coordinate and form a reliable regulatory framework that can be used by third-world countries as well.
Problems Pointed Out by IMF
IMF has accepted that regulatory work is continuing but it is in fragments as all countries have adopted a different approach toward DeFi. Taking a step further, some countries have forbidden investors to release or hold digital assets. Furthermore, bans on transactions have also been imposed lately which have affected the real purpose of cryptocurrencies which is to use them for payments. Contrary to such a stance toward crypto, some countries like El Salvador have warmly welcomed crypto and started using it as national currency even though it is a risky endeavour at the moment.
The blog also states that the step-behaviour towards crypto is forcing crypto actors to migrate to other countries in pursuit of friendly regulations. The most appropriate example of this is the crackdown against miners by the Chinese government in 2021 which forced them to relocate.
Three Benefits of Global Regulations
The IMF blog post has not only brought attention to problems with the current regulatory frameworks but also presented three benefits for the matter at hand. According to IMF, global regulations would fill the gaps between regulations that give way to the misuse of crypto assets. Secondly, it would bring stability and consistency which will ultimately lead to alignment with the mainstream regulations. Lastly, it would help to generate 1 comprehensive set of rules that would cover all the loopholes and bring all actors under one umbrella. In nutshell, a single but comprehensive set of regulations would be applicable and beneficial for all.
South Korea On the Same Page
It is pertinent to mention that yesterday the director of South Korea’s Financial Services Commission said that they will not hurry in approving any regulations before the other countries. It means that it wants to observe the regulations of other countries and learn from their mistakes.
In addition to this, he stated that because the cryptocurrency market is global, it would be pointless for one nation to enable a regulatory framework while the other nations do not. The only way to solve the issues that arise from the implementation of regulations and the resulting damage to investors is to have a universal set of regulations that are put into place everywhere on the planet in a methodical manner and without any obstructions.
