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Coin Circle (120BTC.com) News: As the crypto market becomes more and more popular, according to the International Monetary Fund (IMF), crypto assets have evolved from “niche products” in the past few years.
Product) into a more mainstream presence, prompting the need for more comprehensive regulation of the sector.

In the latest research report of the International Monetary Fund (IMF), this article is written by IMF Market Director Aditya Narain and Assistant Director Marina
Morett writes and clearly points out that crypto assets have transformed into the main products used by major institutions for speculative investment, hedging against weak currencies and payment instruments, and advocates that cryptocurrencies have been around for more than a decade, but only now has regulation of crypto become a policy top of the agenda.

In addition, the author mentioned in the report: The recent failures of exchanges, cryptocurrency issuers and hedge funds such as Three Arrows Capital and the LUNA incident have added impetus to promote regulation.

 Consistent Cryptocurrency Regulatory Framework

However, according to the Narain and Moretti report, it is an uphill battle for regulatory authorities to formulate a regulatory framework for cryptocurrency. Due to rapid changes in the market, the difficulty of supervision has greatly increased, and there are serious obstacles such as the lack of talents familiar with encryption skills in institutions. To further complicate matters, the terminology used to describe many different activities, products and stakeholders is not uniform across the globe.

The actual uses of crypto assets include banking, commodities, securities, payments, etc., all with different frameworks and goals. Some regulatory agencies may prioritize protecting consumer interests and transaction security, but cryptocurrency participants still have miners, verifiers, and protocol developers. , which is very different from the traditional financial model, so the existing traditional finance will not easily cover all roles, which also makes the author mention in the article the need for a coordinated, consistent and comprehensive global cryptocurrency regulatory framework.

Since crypto assets no longer remain closed, many functions of today’s financial markets, such as providing liquidity, leverage, lending, storing value, etc., have been used in crypto finance. Most mainstream players are actively grabbing the market, so regulators need to catch up. , formulating the regulatory application of the consistency principle of the same activities and the same risks in the encryption field.

 Reasonable supervision can provide a safe space for innovation

International Monetary Fund (IMF) Managing Director Kristalina George
Georgieva once mentioned that "asset-backed" stablecoins will play a positive role and emphasized that the key role of the IMF is to "establish channels and connect different CBDCs so that fragmentation issues will cause less damage to the world economy. Or even minimize this problem".

Recently, Coindesk reported that the European Central Bank is currently exploring whether to issue CBDC. It is expected that the European Central Bank will formally decide whether to take action in 2023. This also echoes the statement in the Narain and Moretti report that reasonable supervision can provide innovation Safe space.

"A global regulatory framework will bring order to the market, help build consumer confidence, delineate what is allowed and continue to provide a safe space for useful innovation."

 Current status of regulation by various governments

In fact, regulatory agencies in various countries are not inactive, and many countries have begun to formulate different strategies. In Europe, the long-awaited final legal text of cryptoassets (MICA) regulations will be released in the next four to six weeks. In the United States, a crypto regulatory bill called the Responsible Financial Innovation Act will solve some of the problems the cryptocurrency industry has faced recently.

In an extreme situation, when the government bans the use and issuance of cryptocurrency, it may cause another country's cryptocurrency to become more popular, which will create an unfair competitive environment and fail to prevent cryptocurrency participants from migrating to regulatory oversight. Lower countries, this is also the situation faced by various countries in formulating different regulatory policies.

Supervision is accelerating, but as time goes by, more and more different regulatory frameworks will emerge in each country. This is why the IMF calls for globally consistent supervision, so that the problems faced by cross-border supervision can be compensated and maintained Leveling the playing field currently requires a regulatory architecture that is comprehensive and encompasses all players and all aspects of the crypto ecosystem.