Cryptocurrencies Soon Will Get Regulated - IMF

The global lender’s head Christine Lagarde wants to prevent cryptocurrencies being used for illegal activity

by Viko
12 February • 3 min
In Regulation

The International Monetary Fund’s chief Christine Lagarde believes that cryptocurrencies are a domain that needs clear regulation and proper supervision by national governments in order to avoid scamming schemes in the newly evolving industry. Lagarde admitted that some “dark activity” is probably ongoing in the crypto world, as cited by CNN Money.

She added that the efforts of the financial institution are focused towards preventing the usage of cryptocurrencies for money laundering or funding international terrorism.

Lagarde insisted that the regulations should be aimed not so much at the quantities accumulated, but how they are spent.

This is the second time IMF stresses on the matter. Earlier in January, its spokesman Gerry Rice said that better international discussion and cooperation between the regulators is required.

When the price of certain asset gains value quickly, the greater the risk becomes, especially when the players on the market have borrowed money to buy it. Investors should consider that risk and take adequate measures to control it, Rice told Bloomberg.

There has been no regulation, neither control in the cryptoworld since the introduction of the Bitcoin back in 2009. For some players, this is the essential core of decentralization and its purpose, for others this is creating environment for money laundering, financing of terrorism, speculations and fraud.

National governments and central banks share the second opinion spreading warnings about the “not so clear nature of cryptocurrencies”.

Last year the FBI and the US Securities and Exchange Commission (SEC) began a major investigation of the Initial Coin Offerings (ICOs), related to the creation of new cryptocurrencies.

Meanwhile, China has forbidden any digital currency trade, while South Korea has banned anonymous trade.

Another country, where cryptocurrencies are subject of suspicion is India, where 100 000 bitcoin investors received tax notifications.

The European Union has announced that political agreement has been reached in terms of policy against money laundering and financial fraud. If these regulations are approved, private wallets and exchanges will have the same obligations as traditional market institutions. In other words, anonymous trade, payments and possession of digital currency will be forbidden.

These regulations will put end to the ICOs as we know them in Europe. According to experts, some 40% of all ICO procedures over the past three years were based in the EU.

In addition, Facebook banned advertising ICOs, showing the users that cryptocurrencies will not be tolerated.

Many government leaders have already expressed positive opinion about the cryptocurrency and the future regulation of the market.

Britain’s Prime Minister Theresa May also said that the UK government is very serious about cryptocurrencies “because of the way they are used, particularly by criminals”.

After reaching a record high of USD 20 000 in December, Bitcoin plummeted to under USD 10 000 last week, which brought the whole cryptomarket down. Its’ global market capitalization now is about USD 420 billion.