IMF Publishes Report Detailing Regulatory Recommendations for the Cryptocurrency Industries

The International Monetary Fund (IMF) has released a report that focuses on advancements within the fintech industry, specifically looking at the rapidly evolving cross-border payments industry. An emphasis is placed upon discussing distributed ledger technology, which is presented as having the “potential to offer important service improvements and costs savings.” Much of the report seeks to define and classify the cryptocurrency industry, whilst highlighting key concerns and recommendations with regards to regulators and lawmakers.

Also Read: EU to Consider Adopting Anti-Money Laundering Laws That Address Bitcoin Exchanges

The IMF Report Seeks to Provide Detailed Classifications for Distributed Ledger Technology

The IMF has released a report that provides detailed analysis of cryptocurrency technology, and the potential implications that such may have for lawmakers, governments, and financial institutions.

IMF Publishes Report Detailing Regulatory Recommendations for the Cryptocurrency Industries

The report stresses that these “new technologies may require jurisdictions to revise rules governing ownership and contractual rights and obligations”. Greater KYC guidelines, regulatory oversight and regulation pertaining to new cryptocurrency development, and a critical discussion pertaining to balancing privacy and transparency considerations are recommended as prospective policy considerations for governments in assessing DLTs – framing such as necessary in order to gain widespread consumer trust in distributed ledger technology (DLT). Greater regulatory oversight was also advocated for the purposes of combating money laundering, tax evasion and terrorist financing.

The IMF report seeks to provide detailed classifications for distributed ledger technology. The report categorizes DLT as being either ‘permissionless’, or ‘permissioned’. ‘Permissionless’ DLTs are likened to Bitcoin, and described as “open schemes” that “could be very disruptive if successfully implemented.” ‘Permissioned’ DLTs on the other hand, are defined as having a “validation process… [that is] controlled by a preselected group of participants (‘consortium’) or managed by one organization (‘fully-private’)”.

The Report’s Classifications May Inform Governments’ Future Cryptocurrency Regulations

The IMF report seeks to demarcate between “intrinsic tokens”, and “asset-based tokens”. “DLT records the transfer of ownership of ‘digital tokens’, which are essentially units in a ledger. They can either have intrinsic value (an ‘intrinsic token’ like Bitcoin), or be digital representations of a physical or digital asset that exists outside the ledger (an ‘asset-based token’, representing an interest in another asset, such as securities).” This semantic differentiation is important as it could be used as the basis to develop separate juridical frameworks for tokens tied to a fully developed and functioning platform/project, and tokens that have been issued by a project that is conducting an ICO – allowing for the demarcation to be used as a basis for regulators to clamp down on the rapidly proliferating ICO industry.

The report also discusses the antagonism the decentralized trustless execution of transactions on blockchain networks increasingly becoming tied to ‘real-world’ transactions. ”The legal status of a digital token, and the legal effect of its transfer are not clear. For example, would the transfer of an asset-backed token (e.g., representing a security) on a ledger transfer legal ownership of the security or would registration outside the ledger (e.g., in a corporate share registry) still be required? Jurisdictions are trying to develop answers to these questions but country practice varies. The resolution of these questions is crucial for the economy to function and will require more thought by policymakers.”

The IMF Report Has a Number of Positive Implications for the Cryptocurrency Industry

The report advocates that “policymak[ers] will need to be nimble, experimental, and cooperative”, and ultimately encourages governments to work together in developing an inclusive regulatory apparatus for distributed ledger technology. The IMF also promotes the adoption of distributed ledger technology on the part of banks and financial institutions and encourages the creation of “regulatory sandboxes” for the purposes of fostering the “innovative and dynamic” DLT industry.

The IMF report has a number of positive implications for the cryptocurrency industry. The encouragement of inclusive regulatory frameworks and promotion of governments seeking to work with the DLT industry shows that major global economic institutions are recognizing the innovative potential of bitcoin, and seeking to harness rather than oppress such. The report also recognized that the distributed ledger technology is producing an incredible array of what are essentially free technological breakthroughs.

IMF Publishes Report Detailing Regulatory Recommendations for the Cryptocurrency IndustriesDespite signifying a path toward mainstream adoption for cryptocurrencies and digital ledger technology, there are many within the cryptocurrency community that are deeply skeptical of the IMF’s report. Some fear that blockchain and distributed ledger technology will become another tool wielded by the state for centralization and control. The report’s cautious recognition of bitcoin’s “disruptive potential”, and classification of bitcoin as a “permissionless” token may signify a preference toward the development and use of DLT projects that compete with bitcoin’s utility, but can be subject to influence from governments and institutions.

Do you think that the IMF’s report has positive or negative implications for the cryptocurrency economy? Share your thoughts in the comments section below!

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  • decentralized is a powerful way of being

  • nasir man manuty

    Any idea from IMF should be throw it into Dustbin immediately.They trying to overrule Decentralise cryptocurrency system.JEWS metallity always to control global financial system.STOP it.

    • M. F. Ali

      I have to agree with ur statement mate..

    • I was with you right until it was about the Jews.

      • Williamb293

        Janet Yellen, Ben Bernake, and Alan Greenspan (aka the last 3 chairmen of the federal reserve bank) are all Jewish. Look at world bank and IMF ect. They are mostly run by jews as well. The historical reason for this is that usury(loaning money at interest) was illegal for Christians and muslims.

    • Robert McAlery

      Oh yes, the Jews are the real problem as always. Along with the Illuminati of course. And don’t forget those nasty Reptilian aliens from Zeta Reticuli.

  • Mattyoung

    Didn’t read the report, just the summaries.
    But economists were behind the report, and economists are interested in the new automated liquidity functions that are inherent in ledger and savings and loan tech. Blockchain is not that big of a deal to economists, just another database format. But automated setting of interest charges to stabilize supply and demand goes right to the heart of economics, and right to the heart of crypto currencies.

    Economists want to know more about secure elements because secure elements will be passing crypto coins around with the null ledger, rarely calling the blockchain and running off a single side chain with branded bitcoin and automated S&L. That is the model the IMF is looking at, widespread S&L managing network congestion and everyone having a secure element in their hand, with full bearer cash (no ledger service required).

    I know the economists, they are already well ahead of the bitcoiners regarding auto traded pure crypto cash.

  • Liberty88

    The IMF “seeks to Define and classify….” What a bunch of clowns – it’s already been defined (doesn’t need yours) and the classification has nothing to do with you jerkwads. The international monetary farce is just that – a crooked agency that prints money out of thin air to enslave the masses for the 1%.

    • Absolutely. You can *bet* there are going to be thousands of scams (already are really) to take people’s money. These alt-coins are (now) built entirely for the profit of the builders, so who knows what lengths they may go to in order to market them. I am waiting for more nation-state backed cryptocurrencies. That is the future I think.

      • LMFAO! Crypto is supposed to be the alternative to fiat nonsense.

        • As for nation states.. they dont just surrender their monetary power. If a cryptocurrency dominated, they would nationalize it, or create a new national one and make the prior illegal or inaccessible. I can’t even buy bTC already because Coinbase shut down my account and they are essentially the sole entry and exit point in the USA. And, yes, we still have to enter and exit fiat. Already they have control…

        • As for nation states.. they dont just surrender their monetary power. If a cryptocurrency dominated, they would nationalize it, or create a new national one and make the prior illegal or inaccessible. I can’t even buy BTC already because Coinbase shut down my account and they are essentially the sole entry and exit point in the USA. And, yes, we still have to enter and exit fiat. Already they have control… only alternative was gildera[dot]io and I strangely can’t link my bank there. And no, I have done nothing wrong, no shady darknet, etc…

          • They can keep their monetary power. We’ll keep ours. You do not have to use fiat, except to pay taxes nation states have assured that.

          • I did to mortgage a house. They would not even let me keep my deposit in Bitcoin, causing me to miss the 2nd big run-up (except for a bit). Same for cars, and, well, most everything, except our fantasies.

          • Yes, mortgages = banksters. As for the rest of your hyperbole, it’s false. You can buy cars with bitcoin. You can buy groceries with bitcoin. You can buy hardware with bitcoin. I’ve seen it.

          • You can theoretically do those things, but the question is how much harder is it.. For me, it would be substantial, as I don’t live in an urban area, and – well – the big boys just aren’t playing yet.

          • How theoretical are Home Depot, Target, Walmart and Lowes, for starters? My sister lives in the sticks, and she has those.

          • As far as I’ve ever seen, a person would look at me like I was crazy if I tried to pay by Bitcoin at any of those stores. Many may announce they support the currency, but roll it out to a few test stores only, I don’t know – but I sure don’t see widespread support. If you do, that’s a great place to live.

          • Williamb293

            you got to move your coins to a private wallet after buying on coinbase. You could also use Gemini to buy BIT and ETH.

          • That’s just it … I had no idea I have to move my coins before I dare buy anything on their ‘prohibited list’ (which is absurdly broad and includes all kinds of perfectly legal things).

    • Dbt123

      Good points

      • Liberty88

        Thank you.

    • pride

      Indeed, if the 99.99% now have freedom that authority laden concensus is giving way to , the human valued concensus. Those who are still defining money the way IMF defines it will never really get what freedom of money exchange is, and that’s digital currency.

  • Government, always trying to jump out in front of a parade to lead it.

  • Like it or not, the IMF is the hidden hand behind which the world works. Their power is immense. People rarely speak of them, and that’s how they like it. They don’t have to answer to you or me, so don’t care what you and me think. It is a scary conglomeration of power if you ask me, BUT that is just my opinion. In theory, sure, centralization always provides a better, more equal, society. In practice, those at the center look out for #1, leaving those on the outside to their mercy.

    • Centralization always provides a tool for the powerful to screw the rest.

    • Dbt123

      Good points…IMO …Cash money is doomed…All your transactions belong to Us!

  • One thing the report points out correctly is how “sh_t” coins are proliferating under the mantra “ICO’s” and that they are fundamentally different than Bitcoin.

    • Yea, those ICOs have become quite the joke. Reminds me of GoFundMe, lol.

    • :) YO (:

      “some” ICO’s are more dangerous than IMF report 🙂

  • Oh the fear of interference is there, not with us. The fear is with them. Full text from report: “13. As DLT can take different forms, its potential as well as challenges will vary accordingly. DLT can be categorized as “permissionless” or “permissioned” depending on who can participate in the consensus-driven validation process. Permissionless DLTs allow anyone to read, transact on, and participate in the validation process. These open schemes (that underlie Bitcoin, for instance) could be very disruptive if successfully implemented. By contrast, in permissioned DLTs, the validation process is controlled by a pre-selected group of participants (“consortium”) or managed by one organization (“fully-private”), and thus serve more as a common communications platform. Some technological hurdles still limit DLT adoption. To date, scalability of DLT networks is not fully demonstrated, especially to process a volume of transactions characteristic of large, liquid markets. In addition, DLT networks are still not perfectly interoperable. Finally, privacy protection, as well as operating costs, speed, and transparency still need to be improved.” This Section 13 actually shows their favoritism to consort in private with a fintech like bitcoin if they could prove their reliability to provide large private liquid transactions via a central consortium. Am I missing something? They already do exactly that without “DLT” or Blockchain Cryptocurrencies. I think their fear may have to do with the competition Bitcoin has been giving them. This Section shows they want to be interoperable and participate in the consensus driven “validation”. Only one way to do that, IMF, mine or run a popular mining pool or have a large and popular open exchange which we call decentralized open consensus participation. We should cheer that cryptocurrency markets are allowing large firms and countries a choice besides the IMF and The World Bank to transact in Private and in full representation. I encourage everyone to read the report it is free to download in PDF. Section 31 shows their their fear about themselves being cyber-attacked if they do not decentralize a DLT an obvious new funding and fee drive purpose.They detail further in the document more fears about using DLT for back-end processes, compliance; and means of payment. They recognize DLTs are better in processing speed. They fear difficulty in KYC/AML without control of the token of the transaction, the block addresses. They settle the document deep in the end on their fear of decentralization or the break up of their HUB and SPOKE traditional transaction network and bring up the price volatility of Cryptocurrencies. They miss the beauty, openness, simplicity, and privacy of crypto. I predict a very rocky time for the IMF as they continue to show their irrelevancy in the coming crypto world.

  • The problem I’ve found is that these alternate means of acquisition come with steep penalties. Thus, I’m left with 2 choices of buying cryptocurrencies in the USA, and for some weird reason I am effectively locked out of both (having done no trading on the second, locked from the start). This makes me strongly believe there is a ‘blacklist’ on the entry/exit points to fiat. Now, I know, you say, “screw fiat”. Well, the problem is, me and the 99.99% of the population get paid in FIAT (or traditional let’s say) currencies, so …

    • That’s funny. I’m using them, and I’m unaware of ANY penalties. Did you even look at all that you can buy with bitcoin?

      WRT fiat, obviously, the bankers and their government cronies hate bitcoin. BTW, I’m paid in fiat. It doesn’t mean I don’t support crypto.

      • I am talking about buying Bitcoin and paying above retail for said Bitcoin. I will check out your links and see if they apply. If I buy a prepaid BTC card in USD, it gets tied to USD, doesn’t it? So, for instance, it wouldn’t work as an investment. Or am I wrong?

      • I am talking about buying Bitcoin and paying above retail for said Bitcoin. I will check out your links and see if they apply. If I buy a prepaid card in BTC, it gets tied to USD, doesn’t it? So all I am doing is selling my BTC for USD. That is an exit point, that is all.

        As for supporting cryptocurrency, obviously I do. Did I indicate otherwise? I would love to know how to buy Bitcoin not through Coinbase or Gildera in the USA w/o markup though.

        • You seem to miss the point. You claimed it was so difficult to spend them. This gives you a way to spend them. There isn’t even a fee.

          So now you’ve switched from “can’t spend them” to “can’t buy them.” You could try earning bitcoin in the free market. You could go to localbitcoins.

          • I am on two topics.
            1. Ok, you can spend them, I concede.
            2. localbitcoins is all highly inflated prices and shady stuff going on.
            3. I do sell goods on the free market and accept Bitcoin, though get very few orders with it (% wise).

          • It’s the market. It is what it is.

          • Well do you see my point about there inherently being a ‘control vector’ at the major exit and entry points to and from fiat? That is my primary complaint right now, since I was shut out of the system for unknown reasons, or so it seems.

            If 1% of my customers bought with BTC, I’d be a happy camper.

          • It’s struggling for its place and growing wildly. I suggest resisting thinking in terms of “exit” and “entry” points. One of the things that bugs me is everyone stating BTC value in dollars. People have dollars on the brain and it’s going to take a long time to get out of that prison of the mind.

            I cannot speak to being “shut out” but in all honesty, the dollar side is where all the “control” is. It’s not any fault of bitcoin. Instead of thinking of being “shut out” of bitcoin, why not consider that forces are trying to “lock you in” to dollars. It’s not just you. In many ways that is going on worldwide. It’s said that some of the recent wars were fought over countries trying to defy the petrodollar.

            More to the point, BTC (or crypto, in general) is the long-term solution to that—currency no state or corporation controls.

            Bottom line, hang in there, and support crypto, even if you have to do strange things to make it work. The reward will be rich and multifaceted.

          • What’s the frequency, Kenneth? Re: “One of the things that bugs me is everyone stating BTC value in dollars. “. Even worse is how everyone calls Federal reserve Notes “dollars”. A note is a promise to pay, a FRN was at one time a promise to pay a dollar (or 5, 10, 20 dollars etc) but now is a fraud as it pays nothing. A promise to pay a thing doesn’t magically transform the promise into the thing it promises to pay! FRNs posing as dollars are the biggest fraud ever perpetrated on humanity and it all starts by calling a FRN a “dollar”.

          • Fair enough.

        • BTW, I did get somewhat lucky. I got bitcoin early, when there was a pretty good way to obtain them cheaply for FRNs. I do spend some of them, though, because I believe they’re about being medium of exchange, not an asset (though if they’re a medium of exchange, they are an asset.)

          • I’ll buy from you at 5% above retail if you ever want to sell any. Of course, we’ll not use any of the payment processors that prohibit such (before I have yet another account inexplicably shut down). I just can’t express how disturbing it is to suddenly be ‘ousted’ from the ability to easily buy cryptocurrencies w/o explanation (from anyone). This makes me strongly believe there is a ‘blacklist’ that the financial regulators are enforcing on the Bitcoin entry points, if not all the exit points (yet). Call me paranoid, but I had no problem buying and selling cryptocoins for YEARS. In fact, one theory is I traded too much, too much back-and-forth.. but, who knows.

          • I wouldn’t doubt there is a blacklist. AML and NYC laws are scary. That’s why I avoided using banks in the process. You’re not paranoid.

  • Frnk Booth

    I only read a few comments and am not really following this topic (because it is a free for all now), BUT one fundamental rule of of all currency is it will only be worth what people think it is worth. It does not matter if it is gold or digital currency. Keeping this rule (human nature) in mind, no one that has any real money is going to use an unregulated currency. Period. It will be impossible to “get in front” with a new technology and force it onto the masses with the possibility of the “value” disappearing overnight due to some unregulated “glitch”.

    Hate anyone you feel is necessary, but these facts are human nature. You are not going to change it. The devil you know is always better than the one you don’t.