The International Monetary Fund (IMF) has called for the greater regulation of the cryptoasset market.
The Fund said that unbacked crypto assets are the ‘oldest and most popular type of crypto assets’, that rely not on any backing asset for value but instead on supply and demand.
The IMF said, “They were originally developed to democratise payments but are mostly used for speculation. Crypto assets were designed to disintermediate financial services, but centralized entities, such as exchanges and wallet providers, offer key functions to users and sustain the necessity of trust in one or several entities.”
Currently, many of these cryptoassets are not covered by existing conduct, prudential or payment regulations which can generate risks to market integrity, market conduct and potential financial stability.
To deal with these challenges, the IMF recommended that global bodies work to develop common taxonomies that can inform global and cross-sectoral standards while also improving data insights.
The organisation added, “Standards should be risk-based, with greater requirements on entities and activities that generate more risk. Crypto asset service providers that deliver core functions and generate key risks should be licensed, registered, or authorised.”
Earlier this year, the OECD released a consultation document concerning a new global tax transparency framework to provide the reporting and exchange of information of crypto assets.
Alongside the framework for crypto assets, there will also be proposed amendments to the Common Reporting Standard for the automatic exchange of financial account information between countries.
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