Regulation
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Experts talked about what caused the IMF proposals to introduce common crypto-regulation standards, and how they will affect the industry
The International Monetary Fund (IMF) has released a report on digital assets calling for the recognition of the Financial Stability Board (FSB) as the world leader in coordinating and setting uniform standards for regulating cryptocurrencies.
The FSB was created in February 1999 at the initiative of the finance ministers and central bankers of the G7 countries under the original name of the Financial Stability Forum. However, in 2009, at the G20 summit, it was decided to rename it the Financial Stability Board while expanding its membership and powers.
Today, the FSB includes more than 20 countries and jurisdictions, including the G20 countries, as well as major financial institutions such as the IMF and the World Bank. The Bank of Russia also participates in the work of the fund on a permanent basis.
In October of this year, the FSB will propose rules for regulating the cryptocurrency market for consideration by the representatives of the G20 and the heads of central banks. Previously, the organization limited itself to monitoring this industry, saying that it does not pose a systemic risk. However, now the fund intends to propose the introduction of strict regulations and standards relating primarily to stablecoins.
Experts told RBC-Crypto about what caused the initiative of the largest international organizations, and what it can lead to
Control of the world’s finances
The IMF’s proposal to empower the Financial Stability Board as a supranational body to regulate the crypto space reflects the U.S. desire to oblige other countries to abide by the rules of the game, which will be written in Washington, said Chen Limin, chief financial officer and head of trading operations for the crypto fund ICB Fund.
According to the expert, based on the position currently taken by US regulators, we can expect a greater tilt towards creating significant barriers to protect consumer rights, maintain financial stability and reduce the risk of violating AML / CFT requirements to the detriment of innovation. At least until the midterm elections in the United States, which can strengthen Republicans who have the opposite point of view, the specialist said.
The events around Tornado Cash, the US Commodity Futures Trading Commission (CFTC) lawsuit against the decentralized autonomous organization of the bZeroX project, statements by SEC head Gary Gensler on the status of cryptocurrencies and the special position of the US authorities regarding stablecoins create an unfavorable environment for the development of the industry, said Limin. He noted that this forces crypto startups to consider other jurisdictions for doing business. And scaling such an attitude towards the industry to the whole world can slow down its development, the expert is sure.
In his opinion, the current proposal may be due to the desire of the United States to strengthen the levers of control over global finance. The degree of which will weaken against the background of the launch by other states of national digital currencies and the more active use of digital assets, the expert believes.
He explained that due to the distribution of votes in the IMF, the FSB will create supranational standards. The first document is expected in October. However, not all participants in the association will be ready to follow the rules in the future if they contradict their national interests, Limin believes. According to him, this primarily concerns Russia and those countries that take a neutral position in its conflict with the West.
In order for any developed standards to work and be effectively applied, they must be accepted by all existing countries of the world, says Andrey Tugarin, CEO of GMT Legal, co-founder of Bitok. The expert also noted that it is practically impossible.
Regulation of stablecoins
The IMF proposal does not establish new rules for regulating such assets, but suggests using existing traditional methods used in relation to, for example, commercial banks and electronic money (e-money), Tugarin says. He explained that if this proposal is implemented, stablecoin issuers will be required to obtain a license to carry out their activities along with commercial banks.
For several years now, regulators around the world have been trying to resolve the issue of regulating stablecoins, but the matter has not yet come to implementation, the lawyer said. In his opinion, it is still too early to talk about the regulation of stablecoins at local levels, not to mention global ones.
Depending on the level of economic development, stablecoins have already taken their place in the economies of some developing countries, for which the introduction of any standards may be simply unprofitable, the expert believes. Moreover, he noted that if you overdo it with the rigidity of regulation of stablecoins, this can lead to the opposite – the creation of a gray or black sector of the market. And it will allow to circumvent all prohibitions using blockchain technology and all its “advantages”, Tugarin concluded.
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