Market Analysis Report (24 Feb 2023)

The International Monetary Fund (IMF) has taken a seemingly tough stance toward growing cryptocurrency adoption, with a set of recommendations and a call for a “coordinated response.”

In a statement, the IMF wrote that the “widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.”

The organization argued crypto should not be granted official currency or legal tender status, noting that directors “generally observed that while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged.” The IMF said “strict bans are not the first-best options,” adding that a few directors “thought that outright banks should not be ruled out.”

The IMF expressed concerns regarding the effects of crypto on financial stability, legal risks, financial integrity, consumer protection, and market integrity. In order to address these concerns, it discussed a set of nine elements that member countries could use to create a thorough, coherent, and unified policy response.

The recommendations include implementing a clear tax treatment policy for crypto assets. Earlier this month, the IMF said that the risks of El Salvador’s Bitcoin adoption “have not materialized” over the country’s “limited” use.

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/feb/24/