Better regulation of crypto is a key motivator because of recent failures by crypto exchanges and crypto issuers. In the past few years, crypto assets have moved from being “niche product” to more mainstream. This has prompted the International Monetary Fund to call for more comprehensive regulation.
Officials noted in a new report by Aditya Narain, IMF capital markets director, and Marina Moretti assistant director, that crypto assets have changed from being “niche product” to one used for speculative investment, hedges against weak currencies and payment instruments.
These failures along with those of cryptocurrency issuers, exchanges and hedge funds, have “given impetus to regulation.
Regulating crypto assets is difficult
According to Narain and Moretti however, it is difficult to develop regulatory frameworks for crypto assets. They highlight the market’s rapid development, the difficulty in monitoring and the lack of practical skills between regulators as some of the most serious obstacles.
“Regulators struggle to find the talent and learn skills to keep up with the pace of the changing world, given limited resources and other priorities.”
The authors also criticized the inconsistent approach of different regulators to crypto regulation. Instead, they advocate for a global, coordinated, consistent and comprehensive crypto regulatory framework.
“Some regulators may place consumer protection above safety, soundness, or financial integrity. They explained that there are many crypto actors, including miners, validators, and protocol developers, which are not covered by traditional financial regulations.
Global regulation is needed for crypto assets
“A global regulatory framework will bring order and confidence to the markets. It will also instill consumer trust, set the limits of what can be done, and allow for innovation to continue.”
The regulatory community continues to be a gathering place for regulators from all over the globe.
The final text of the Markets In Crypto-Assets regulations in Europe is expected to be published within the next four to six week. The Responsible financial innovation Act, a US crypto regulation bill, is expected to address the most pressing issues facing the sector of digital assets.
Even crypto skeptics are starting to accept regulation over a widespread ban. U.S. Congressman Brad Sherman is the latest to change his tune after admitting that the market “has too many money and power behind” it.