The International Monetary Fund (IMF) called for a coordinated global response to the risks posed by crypto assets.

What Happened: In a board paper, the IMF set out a framework of nine elements to guide members in developing a comprehensive, consistent and coordinated policy response.

The paper addressed concerns about the risks and benefits of crypto assets and operationalizes the principles outlined in the Bali Fintech Agenda.

The adoption of crypto assets in some countries, their extra-territorial nature and increasing interlinkages with the financial system were cited as reasons for the framework.

Directors broadly agreed crypto assets have implications for policies that laid at the core of the Fund’s mandate. They noted serious concerns about financial stability, financial integrity, legal risks, consumer protection and market integrity.

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They considered widespread adoption could undermine the effectiveness of the monetary policy, circumvent capital flow management measures and exacerbate fiscal risks.

The IMF also recommended comprehensive regulations, including prudential and conduct regulations, to be developed and applied to crypto assets.

Effective implementation of the Financial Action Task Force (FATF) standards on anti-money laundering and countering the financing of terrorism (AML/CFT) was also highlighted.

Why It Matters: The IMF stated strict bans are not the first-best option, but targeted restrictions could apply, depending on domestic policy objectives and where authorities face capacity constraints.

Directors emphasized the importance of prioritizing elements of the framework where countries face implementation challenges, including weak regulatory institutions, stressing that the pace and sequencing of implementation should be tailored to the countries’ respective circumstances.

They also highlighted the importance of promoting the principle of “same activity, same risk, same regulation.”

By adopting the framework, policymakers can better mitigate the risks posed by crypto assets while also harnessing the potential benefits of the technological innovation associated with it.

The IMF noted the widespread adoption of crypto assets could have significant implications for the international monetary system in the longer term.

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