The worldwide financial fund (IMF) has called on regulators worldwide to work towards a coordinated effort to regulate the crypto market, as its impact has a far-reaching impression on global economies.

According to the IMF in its latest September bulletin, the crypto market, which reached a global market capitalization of $3 trillion in Nov. 2021, has turn out to be built-in into the mainstream monetary system. As a consequence, there may be an pressing want to regulate the market to stop additional contagion which will smash the global financial system.

The problem, nonetheless, lies in adopting a coordinated effort towards crypto regulation. The fast-paced nature of crypto makes it troublesome for regulators to preserve tabs on hundreds of actors concerned available in the market.

Applying the present regulatory framework could also be inadequate, as completely different use circumstances of crypto belongings appeal to regulators, resembling banks, commodities, and securities. While some regulators prioritize shopper safety, others optimize for security, soundness, or monetary integrity.

Diverging regulatory approaches

Several nations have been proactive on points relating to crypto regulation. For instance, nations like Japan and Switzerland have launched legislative payments, whereas others just like the European Union and the United States are on the drafting stage.

However, nations are taking completely different approaches to administer regulatory insurance policies for crypto belongings.

The IMF acknowledged:

“At one extreme, authorities have prohibited the issuance or holding of crypto assets by residents or the ability to transact in them or use them for certain purposes, such as payments.

At the other extreme, some countries have been much more welcoming and even sought to woo companies to develop markets in these assets.”

According to the IMF, the diverging regulatory approaches don’t present a stage enjoying floor. As a consequence, many crypto actors have opted to migrate to a extra pleasant jurisdiction with the least regulatory constraint.

Call for global regulation

The IMF has referred to as on nationwide authorities to think about working in the direction of a global regulatory framework to bridge the hole brought on by fragmented rules.

A complete framework will cowl all features of the crypto market whereas aligning with the mainstream regulatory system.

The IMF added:

“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.”

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