As the technological tidal wave takes hold, the International Monetary Fund (IMF) has renewed its call for international governments to regulate bitcoin.
Traditional economists and established banks are concerned about the instability that comes with such a new technology. But, unfortunately, several overly optimistic investors have discovered how quickly online markets may shift – sometimes as a result of something as simple as a tweet – and have lost thousands of dollars.
The case for regulation is based on the need to safeguard vulnerable investors. The most ardent proponents of free markets in the cryptosphere, on the other hand, think that the lack of legislation is what gives the phenomena so much promise.
The IMF is firmly in the first camp, urging nations to collaborate on broad regulations as banks face greater pressure to accept cryptocurrencies.
In a statement on Friday, the organization said that cross-border collaboration and cooperation are critical to addressing technical, legal, regulatory, and supervisory concerns.
The IMF is concerned about cryptocurrency’s potential to skip traditional country borders, saying that the “borderless” payment system might eventually become a problem for those in positions of authority who are responsible for managing economic systems.
The statement went on to say that crypto’s cross-sector and cross-border scope restricts the effectiveness of national responses. Furthermore, governments are pursuing a wide range of strategies, and current rules and regulations may make it impossible for national procedures to embrace all aspects of these assets.
Furthermore, many crypto service providers operate across national borders, making regulation and oversight more difficult. Uncoordinated regulatory activities may make it easier for potentially harmful actors to enter the market. destabilizing capital flows to take place.
After years of suffocating bitcoin, banks and governments are now beginning to recognize the unstoppable force. However, in response to what has been the largest year in cryptocurrency growth to date, the Reserve Bank of Australia (RBA) is dampening calls to adopt its own electronic asset, according to the Sydney Morning Herald.
Philip Lowe, the Governor of the Reserve Bank of Australia, has remained a skeptic and a proponent of strong regulation, warning the public about the uncertainty surrounding these assets’ long-term usefulness.
Dr. Lowe also doubts that customers would ever replace fiat currency with crypto assets for day-to-day transactions, citing the volatility and overall value of emerging technology as reasons.
It’s worth noting that bitcoin is currently priced at $A67,104 per coin, which is more than treble its value from a year ago.
Have not seen a compelling public policy rationale to move in this path to date, especially considering Australia’s efficient, rapid, and convenient electronic payment system, according to Dr. Lowe.
The utility of the underlying payments functionality to end users, the security of the funds invested, price volatility, the stability of the intermediaries used, and the asset’s ultimate backing are all relevant considerations – not to mention the significant energy consumption required to make a transaction using some of these crypto assets.
However, as technology advances and consumer preferences shift, it’s possible that the public policy case may develop swiftly. It’s also feasible that these tokens will provide a lower-cost alternative to conventional payment technology for some sorts of transactions.
Treasurer Josh Frydenberg is expected to propose a variety of regulatory and tax recommendations relating to digital wallets in the coming weeks.
According to reports, the move will entail the establishment of a central bank digital currency, which the Treasurer claims will position Australia at the forefront of the global fintech industry.
These reforms, he said, will give customers a regulatory framework to support their growing use of crypto assets and explain how new payment methods are treated. As more Australians use these technologies and invest in digital assets, a strong regulatory framework is needed to ensure that their interactions are controlled.
However, blockchain enthusiasts have slammed established financial institutions’ attempts to put the crypto genie back in the bottle, believing that the innovative technology can create a more efficient and ethical platform for individuals to manage their wealth.
Cryptocurrency is still in its infancy for many people. Its attempts to centralize it will only damage its long-term potential as a game-changing business platform.
Former IMF president Simon Johnson believes the jury is still out on cryptocurrencies, which have only been around for a decade as a payment method.
He believes that they are all still waiting for a defining event that would really draw the lines between what people think.