Cryptocurrency: IMF Says It Is Not A Legal Tender And Should Not Be Recognized As Such

The International Monetary Fund executive board has recommended that cryptocurrency not be granted legal tender status.

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According to the IMF's executive board, which is composed of 24 directors elected by its member countries, by denying the request, they would be protecting the IMF's monetary sovereignty and stability ”. 

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In discussing the Elements of Effective Policies for Crypto Assets board paper – which provides guidance to member countries on the benefits and risks of crypto-assets, as well as appropriate policy responses – it said that, despite the fact that the predicted benefits of crypto-assets have not yet materialized, significant risks have been identified as a result.”. 

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“Macroeconomic risks include risks to the effectiveness of the monetary policy, capital flow volatility, and fiscal risks [plus] serious concerns about financial stability, financial integrity, legal risks, consumer protection, and market integrity.”

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Crypto-asset policy-making has been made a priority by authorities due to high-profile collapses such as that seen at FTX, a cryptocurrency exchange. It was stated by the IMF board that "doing nothing would be untenable.". 

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In addition, “the directors agreed that strict bans are not necessarily the best option, but that targeted restrictions could also be enacted, depending on the objectives of the domestic policy and limitations imposed by authorities.

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There were, however, a few directors who were in favor of outright bans. 

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“The directors noted that regulations should avoid stifling innovation, while the public sector could take advantage of some of the underlying technologies of crypto-assets for their public policy objectives.”

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Cryptocurrency shorts

The United States Securities and Exchange Commission, which regulates stablecoins, is not the appropriate agency to regulate stablecoins, according to Jeremy Allaire, CEO and founder of USDC issuer Circle. It is for this reason, he explained to Trade Algo, that government agencies throughout the world, including those in the US, are explicitly stating that stablecoins are a payment system and a banking regulator activity.

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Kevin Murcko, from Coinmetro, is of the opinion that the SEC continues to get crypto wrong and in doing so is prolonging the pain of the FTX fallout in doing so. According to the SEC, exchanges operating in the US are requested to register with the agency as soon as possible. It has never been clearer that the risks of cryptocurrency in the hands of illicit actors are at the same time as the fact that regulators are going about consumer protection in the wrong way. The SEC has provided virtually no information about the framework they are planning on building... It has a history of prosecuting businesses that open their doors to them... I believe that a self-regulatory organization would be the best option.

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Canadian Securities Administration (CSA) now requires crypto exchanges planning to operate nationwide to pre-register within 30 days.

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There has been an investment of $44 million by Galaxy Digital as part of its acquisition of GK8, a cryptocurrency custody platform that offers cold vault technology that allows transactions to be executed without the need for internet connectivity in order to execute them.

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In a Series A round of funding led by A16z, Here Not There has raised $25m for its project Towns, an online platform that allows people to create decentralized online communities through a Web3 solution.

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Worldwide Webb has received a $10 million investment from Pantera Capital as part of its investment program. Metaverse developers have announced that they have developed an MMORPG (massively multiplayer online role-playing game) that allows players to bring their own NFTs into the gaming ecosystem.

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Crypto prices

The market cap of the 22,600 coins at the time of writing stands at $1.09 trillion, a decrease of 1.4% compared to the last 24 hours.

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