• IMF Managing Director Kristalina Georgieva said that there’s a strong push for regulating digital assets.
• If regulations fail, the IMF could also consider banning cryptocurrencies so that they don’t affect financial stability.

Amid the major blowups in the crypto space last year in 2022, regulating the crypto landscape has become one of the top priorities of global regulators. In what could seem like a soft approach toward digital assets, the International Monetary Fund (IMF) has announced that it would prefer to differentiate and regulate cryptocurrencies instead of issuing an outright ban.

While speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva stated that cryptocurrencies need “more regulation”. He also stated how the financial agency of the United Nation sees digital assets and what they would like to see in terms of regulations.

“We are very much in favor of regulating the world of digital money,” and this is a top priority, said the IMF director. During her interview with Bloomberg published on Monday, February 27, Kristalina Georgieva responded to a question regarding the complete ban on digital assets.

The IMF director said that there’s a lot of confusion currently around the classification of digital money. she added saying:

Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.

Georgieva noted that non-backed cryptocurrencies are speculative, highly risky, and not money. On the other hand, the IMF director supported stablecoins adding that they create a “reasonably good space for the economy”.

Crypto Assets Cannot Be Legal Tenders

During the board discussions over the last few days, IMF Managing Director Kristalina Georgieva said that cryptocurrencies cannot be legal tenders. “Crypto assets are nothing, they cannot be accepted as legal tender,” she said.

However, top officials at the IMF are all making a strong push for crypto regulations. Good regulations, predictability, and consumer protection would be the priority said Georgieva.

Interestingly, she also added that if regulations fail to deliver the intended goal, banning digital assets won’t be off the table since they may create risks to financial stability. During her discussions with other financial personalities at the G20 meeting in India, she said that discussions helped initiate a broader dialogue on cryptocurrencies. India which is hosting the G20 summit this year noted:

Discussions raised “several pertinent policy questions that policymakers and regulators need to evaluate closely. In addition to evaluating the consequences of crypto assets to the broader economy, there is also an existential question on whether crypto assets are indeed the optimal solution for existing challenges in global financial systems”.

India has so far maintained a hot and cold relationship with digital assets. It has more or less discouraged cryptocurrencies by imposing heavy taxes on crypto trading and on crypto capital gains.