IMF Report: Cryptocurrencies Don’t Pose Threats to Global Financial Stability

The IMF released a report in which it believes that lack of international consensus on cryptocurrency regulation makes it difficult for this new market to threaten global financial stability.

In its latest Global Financial Stability Report for April 2018, the IMF took a look at the cryptocurrency world and concluded that they’re not as threatening to financial stability as other organizations might make them look.

“It is impossible to know the extent to which crypto assets may transform the financial infrastructure and whether most new crypto assets are likely to disappear as in past episodes of technological innovation (as many tech companies did during the boom of the late 1990s, for example). Before they can transform financial activity in a meaningful and lasting manner, crypto assets will first need to earn the confidence and support of consumers and financial authorities,” the IMF wrote in its report.

The organization highlighted the fact that one reason why the cryptocurrency market currently cannot have a strong effect on global financial stability is that there is no global consensus as to whether these digital coins are securities or actual currencies.

A variety of countries around the world treat them as alternative purchase instruments, but yet more are strongly inclined to regulate them like they would securities. Sometimes, cryptocurrencies are even treated like both.

The Securities and Exchange Commission in the US still has trouble making up its mind about the phenomenon, especially with regard to ICOs and token sales. So far, it has come to the conclusion that as long as a token has utility, it is not a security.

However, even this clarification is vague. What if a token promises future utility, but cannot yet have that status? For this reason some ICOs have resorted to offering Simple Agreements for Future Tokens (SAFTs) to institutional investors.

On the other hand, as far as the G20 is concerned, the general consensus is that cryptocurrencies are in fact securities and should be treated as such.

Whatever consensus is reached, once countries can agree on how the cryptocurrency market should be viewed in the eyes of the law, they might actually take on a more mainstream status. For now, however, it is precisely because of the lack of government involvement in shaping this space that it bears little threat to global financial markets, at least as far as the IMF is concerned.

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