The accelerated evolution of cryptocurrencies and their impact on the current financial market have generated a global debate on their degree of regulation. In this sense, some states maintain progressive, skeptical, or intolerant points of view.
Crypto assets and tethered products and services have seen a boom in recent years. And its interrelationships with the regulated financial system are tightening. And it easier to open account now on a lot of platforms.
Authorities are managing to alert the risks that come from this sector in progress, which activities do not regulate. Indeed, threats to financial permanence could soon become systemic in some countries.
They are probably the most important and relevant financial phenomenon in recent years, having the most popularity and success. It represents innovation, opportunity, and uncertainty.
The concept of a crypto asset is a little broader than what we see of cryptocurrency. It is simply in the encryption of any asset, good, or service that can be used for the exchange of payment or investment because, precisely as the definition says, it has many possible uses. Beyond currencies, it does operate as a general medium of exchange or available investment medium; that is where the broader section of the crypto asset comes from.
There are so many active crypto types that this definition is entirely open; practically every day, a new terminology emerges. Its language is vivacious and sometimes abusive, but we can think that there are two fundamental types, tokens and cryptocurrencies.
On the issue of regulation
The global regulation of crypto assets must be comprehensive, consistent, and coordinated.
The cadence of this topic, I do not discover anything if I indicate science, technology, economic relations, and even personal relations. They tend to be well ahead of the positive regulation of situations in society, and crypto-assets and the technology supporting them are no exception to that, let’s say, quite general rules. Even though there are some drafts to regulate crypto assets, currently, there is no clear or comprehensive regulation that governs the matter as a whole. It is what causes today with old wicker; these new ones have to do present; this does not stop being a field subscribed to the risk of all kinds.
There is an urgent need for cooperation and collaboration at the global level to face technological, legal, regulatory, and supervisory challenges. However, adopting a comprehensive, consistent, and coordinated approach to regulating crypto assets is, without a doubt, a daunting task.
They have already begun the study and analysis to achieve the policy objective of preserving financial stability without wasting the benefits of technological innovations.
Crypto assets may be profoundly innovating the international monetary and financial system. Accordingly, the IMF has designed a strategy to continue fulfilling its mandate in the digital age. First, the IMF will work closely with the Financial Stability Board and other members of the international regulatory community to clarify a practical approach to crypto asset regulation.
The debate on whether crypto-assets should be regulated or not is still ongoing, and there is no consensus on this. Therefore, some academics or institutions and some countries that have decided to establish some regulation should focus on accelerating the regulatory guidelines to avoid mainly control for the prevention of money laundering and financing of terrorism.
Should note that the operations of many crypto-asset service providers, are cross-border which confuses the tasks of supervision and verification of compliance. Uncoordinated regulatory measures can lead to potentially destabilizing capital flows.
Cryptocurrencies do often believed to operate outside the scope of national regulation. Still, in reality, their valuations, transaction volumes, and user bases react strongly to news about initiatives by regulatory authorities.
Cryptocurrencies and other crypto-assets can take advantage of the traditional financial system. A loss of public confidence in the crypto-asset markets could distrust the financial system in general and regulatory bodies. Therefore, while crypto-assets do not presently represent a risk to global financial stability, it is essential to remain vigilant, monitor developments, and respond to potential threats.
Regularizing cryptocurrencies brings with it many consequences; it is essential to clarify that the legalization of cryptocurrencies as a digital currency and that it be considered legal tender is what could initially give a significant advance to the cryptographic market.
The ultimate goal is to provide greater security to investors and future users.