Why is the IMF strongly opposed to cryptocurrencies becoming official or legal tender?

Author: Jai Hamid, Cryptopolitan; Compiler: Songxue, Jinse Finance

TL;DR

The IMF strongly opposes giving cryptocurrencies "official or legal tender" status.

The group is concerned about the impact of cryptocurrencies on government finances and potential rapid inflation.

It emphasizes the need for strict regulation and a comprehensive cryptocurrency policy.

Cryptocurrencies are making waves in the world economy, and it's safe to say that the International Monetary Fund (IMF) is teetering. As the world sinks deeper and deeper down the cryptocurrency rabbit hole, the IMF believes it’s time to hit the brakes.

**Why is the IMF so afraid of cryptocurrencies? **

The IMF’s latest stance underscores the stark reality it sees in the cryptocurrency space. It asserts that cryptocurrencies must not be granted the status of "official or legal tender."

** The International Monetary Fund believes that the idea of global economies accepting digital assets as tax payments, fines, and debt settlements is a minefield fraught with fiscal risks and potentially damaging government finances. **

Why is the IMF so rigid, you ask? This is because there is a very legitimate fear of the possibility of uncontrollable rapid inflation. Indeed, the growing acceptance of cryptocurrencies in everyday life may pose an undeniable threat to financial stability.

** The IMF also expressed growing concern about the increasing integration of cryptocurrencies in the global economy. **This is not entirely unreasonable. The failure of cryptocurrency exchanges such as Terra is a stark reminder of the financial chaos that can ensue without proper policies.

The group believes that a more holistic and in-depth approach to cryptocurrencies is essential. This will ensure the protection of monetary sovereignty, investor interests and the maintenance of financial stability.

The IMF says the status quo is untenable; **What is needed is strong regulation to curb the growing influence of cryptocurrencies. **

Cryptocurrency Policy

The IMF appreciates the efforts of some policymakers, but believes more needs to be done, especially in implementing global standards.

A quick look at the failures of the FTX cryptocurrency exchange platform and the Terra Luna stablecoin last year makes it clear that clearer policies are urgently needed to protect investors and prevent abuse.

The IMF adheres to a comprehensive, consistent and coordinated policy approach. This is especially important for emerging markets and developing economies, where the impact of crypto assets can be profound.

To address this issue, the IMF submitted a detailed assessment of the macro-impact of crypto assets to the G20 presidency earlier this year. These recommendations follow the principles of solid macro policy foundation, clear legal treatment, effective implementation, and detailed rules.

The IMF's strategy consists of three key pillars:

**1. Oppose the replacement of sovereign currencies with cryptocurrencies. ** This includes maintaining strong, credible domestic institutions and a coherent monetary policy framework.

**2. Does not confer official status on encrypted assets as currency or legal tender. ** It argues that this is critical to safeguarding national sovereignty and preventing potential fiscal risks and rapid inflation.

**3. Proper integration of cryptocurrencies into existing institutions and rules to manage capital flows. ** The IMF said this would help ensure stability and minimize potential disruptions.

The group’s apparent concern over the potential damage cryptocurrencies could cause to the global economy is evident, and its call for immediate action is louder than ever.

As we enter the uncharted territory of digital currencies, one thing is clear - the IMF will not stand idly by. It's time for everyone to pay attention.