April 19, 2024
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IMF Calls for Balanced Crypto Regulation in Latin America and the Caribbean

The International Monetary Fund (IMF) has restated its call for the regulation of cryptocurrencies in certain countries but cautioned against a complete ban as the most effective approach.

In a report released on June 22, focusing on Latin America and the Caribbean, the IMF highlighted the different approaches taken by local governments in dealing with the adoption of cryptocurrencies and central bank digital currencies (CBDCs). El Salvador has accepted Bitcoin (BTC) as legal tender since September 2021, while the Bahamas became the first country to launch its own CBDC, the Sand Dollar, in October 2020.

According to the IMF, Brazil, Argentina, Colombia, and Ecuador, whose crypto regulations are still in progress, rank among the highest countries globally in terms of digital asset adoption. Their efforts aim to assist the unbanked, enable faster and more affordable payments, and more. The fund also noted that most central banks in the region “have or are considering adopting digital currencies.”

The IMF emphasized the potential benefits of well-designed CBDCs in strengthening payment systems, increasing their resilience and efficiency, and promoting financial inclusion in Latin America and the Caribbean. It cautioned against the complete prohibition of crypto assets, stating that such an approach may not yield long-term effectiveness. Instead, the region should focus on addressing the factors driving crypto demand, including unmet digital payment needs among citizens, and enhancing transparency by recording crypto asset transactions in national statistics.

The IMF has frequently voiced its opposition to countries adopting cryptocurrencies as legal tender. On June 19, Tobias Adrian, the director of the monetary and capital markets department at the IMF, proposed a payment system that utilizes a single ledger for recording CBDC transactions. This idea faced significant criticism from many participants in the crypto industry.

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