The International Monetary Fund (IMF) has once again flagged the danger of rapid crypto adoption, citing systematic risks and uncertainty over how crypto would become a part of mainstream finance.
The financial watchdog’s latest concerns have been prompted by India’s decision to go ahead with a regulatory framework that would regulate digital assets in the country, such as Bitcoin and Ethereum. The country is planning to introduce a 30% tax on digital trading.
IMF mission chief for India Nada Choueiri has commented that there are serious systematic risks to crypto, including lack of transparency and the growing threat of fraud and hacking attacks against blockchain based solutions.
The IMF is also considering whether countries should plan any regulatory changes as part of a broader group of economies rather than passing non-compatible regulatory frameworks on their own.
A spokesperson for a major financial institution in the country tried to put these concerns to rest. “We have drafted a consultation paper on cryptocurrency. Now, we have reached out to institutional stakeholders within the country and outside. We are taking inputs from the IMF and the World Bank and incorporating these”, the unnamed person told The Mint, a media outlet.
Luckily for the IMF, New Delhi is also keen to see more people involved in understanding how cryptocurrencies work and what the best course of action would be.
India has asked the Financial Stability Board, a G20 financial watchdog, to weigh in. India is also cognizant that one country regulating or banning crypto could prove ineffective and a better coordinated action is needed to make this work.