The International Monetary Fund (IMF) has recently published a report about the current state of crypto adoption and regulation. The report details how crypto adoption has gone mainstream, giving rise to the need for a global standard of regulation. A kind of regulation that will be more consistent and comprehensive. In its recent report titled, “Regulating Crypto: The right rules could provide a safe space for innovation,” the IMF maintains that crypto assets are no longer the “niche products” they used to be.
Per the authors of the report, capital markets director Aditya Narain and assistant director Marina Moretti, crypto assets now have uses that extend far beyond the usual. For instance, crypto assets can be used as payment tools and as hedges against weaker currencies. They can also be used for speculative investments.
For the past decade or so, crypto assets have been gradually gaining ground. However, it wasn’t until recently that the need for regulation became clear for all to see. Apart from its growing popularity and wide use cases, recent failures of top crypto firms are part of the motivation in the push for more robust crypto regulation. As the authors noted in the report, “The failures of crypto issuers, exchanges, and hedge funds – as well as a recent slide in crypto valuations – have added impetus to the push to regulate.”
It is a given that crypto regulation is a necessity if the crypto industry is to continue to survive. However, there are so many factors hindering the establishment of global crypto regulation. According to the authors, achieving a standard set of rules will not come without a struggle. They wrote, “Applying existing regulatory frameworks to crypto assets, or developing new ones, is challenging for several reasons.”
Highlighting some of the factors, the authors mentioned the rapid rate at which the market is evolving, regulators could struggle to keep up with other hurdles including inconsistencies in regulatory approach, among many other things.
That said, despite the difficulties surrounding regulation, global regulators appear to be gradually converging at a regulatory table. For instance, Europe is on the verge of releasing its highly-anticipated Markets in Crypto-Assets (MiCA) regulations. The US is also working on its own crypto regulation bill which it calls the Responsible Financial Innovation Act.