On the sidelines of the G20 meeting in India, IMF Managing Director Kristalina Georgieva said the International Monetary Fund would prefer to differentiate and regulate crypto assets rather than enacting a complete ban, although that option is still in the discussions. IMF chief Kristalina explained how the UN financial agency views digital assets and what it would like to see in terms of regulation. “We stand for the regulation of the world of digital money, and this is a top priority,” she said.
During an interview with Bloomberg published on February 27, she answered a question about her recent comments about a potential total ban on cryptocurrencies. She said that there is still a lot of confusion about the classification of digital money. “Our first goal is to distinguish between government-backed central bank digital currencies and publicly issued crypto assets and stablecoins,” the head of the IMF said. She added that fully backed stablecoins create “a pretty good space for the economy,” but unbacked cryptocurrencies are speculative, high-risk assets, not money.
Referring to a recent paper recommending global regulatory standards, she said that crypto assets cannot be legal tender as they are not backed. And, as usual, the option of banning cryptocurrencies “should not be taken off the table” if they begin to pose a greater risk to financial stability. However, good regulation, predictability and consumer protection would be the best option, and a ban was not needed to think, said Georgieva. When asked what could be behind the decision to ban cryptocurrencies, she said failure to protect consumers from the booming world of crypto assets would be a major catalyst.
The IMF, the Financial Stability Board and the Bank for International Settlements are jointly preparing to publish regulatory framework guidelines in the second half of the year. Cryptocurrency lawyers have dismissed comments from the head of the US securities regulator, who stated in a recent interview that every cryptocurrency other than bitcoin (BTC) is a security and falls under its jurisdiction. In an extensive Feb. 23 interview with New York Magazine on cryptocurrencies, Securities and Exchange Commission (SEC) Chairman Gary Gensler stated that “everything other than bitcoin” falls under the authority of the agency. He added that other crypto projects “are securities because there is a group in the middle that is waiting for profit,” which he says is not the case with Bitcoin.
However, Jake Chervinsky, a lawyer and lead policymaker for the Blockchain Association, a crypto advocacy group, stated in a Feb. 26 tweet that “Gensler’s opinion is not law,” despite his claimed authority over the crypto sector. He added that “until the SEC is ‘proved in court’ as to its jurisdiction over each individual token ‘one at a time’, then it has ‘no authority to regulate any of them’. Attorney Logan Bolinger also addressed the issue, tweeting on Feb. 26, “Gensler’s opinion on what is or is not a security is not legally dispositive,” which means it’s not the final legal definition.” And, right there – “Judges, not SEC chairs, ultimately determine what the law means and how it is applied.”
Jason Brett, head of policy at the Bitcoin Policy Institute, said that Gensler’s comments “are not to be feared, but are to be feared.” Meanwhile, Gabriel Shapiro, general counsel at investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible enforcement the SEC would have to do in the industry to strengthen its rule. Shapiro analyzed that, according to Gensler, more than 12,300 tokens, worth about $663 billion, are unregistered securities that are illegal in the US, and as Chervinsky mentioned, the agency will have to file a lawsuit against every token creator. According to Shapiro, the SEC handled cryptocurrencies in two main ways: either by fining token creators and requiring the issuer to register, or by fining them and ordering the created tokens to be destroyed and delisted from exchanges.
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