IMF Wants “Control” Over Crypto Than Banning It Outright

IMF Wants “Control” Over Crypto Than Banning It Outright

As of March 2023, there have been discussions on the stance of the International Monetary Fund (IMF) towards cryptocurrencies. While some believe that banning cryptocurrencies should be an option, the IMF chief has stated that there are disagreements over restructuring debt for distressed economies. The IMF’s position on cryptocurrencies seems to be geared towards exerting control rather than an outright ban.

One article from Bloomberg suggests that the IMF is committed to presenting a foundation for the regulation of private cryptocurrencies. The report suggests that the Financial Stability Board and the Bank for International Settlements are also involved in this effort. However, it is not clear from this report whether the IMF prefers regulation to an outright ban.

Another report from Yahoo Finance suggests that the IMF is concerned about cryptocurrencies being used to evade capital controls imposed by governments. The report also suggests that the IMF is discouraging countries from making Bitcoin the legal currency of their countries. However, the report does not explicitly state whether the IMF prefers regulation to an outright ban.

Reports from other sources suggest that the IMF is more interested in regulating cryptocurrencies than banning them outright. For example, an article from the South China Morning Post suggests that India has asked the IMF and the Financial Stability Board to prepare a technical paper on crypto assets that could be used to formulate a coordinated and comprehensive policy to regulate cryptocurrencies. The article notes that while some countries may consider banning cryptocurrencies outright, this approach may not be the most effective way to manage the risks associated with these assets.

However, despite these concerns, the IMF’s recent actions and statements suggest that the organization does not necessarily favor an outright ban on cryptocurrencies. Instead, the IMF appears to be focused on developing effective policies and regulations for crypto assets. For example, in February 2023, the IMF’s Executive Board discussed a board paper on “Elements of Effective Policies for Crypto Assets” that provided guidance to IMF member countries on key elements of an appropriate policy response to crypto assets. The paper defined and classified crypto assets based on their underlying features, described their purported benefits and potential risks, and presented a policy framework for crypto assets that aimed to achieve key policy objectives such as consumer and investor protection, financial stability, and anti-money laundering and combating the financing of terrorism (AML/CFT).

In addition, the IMF’s recent actions suggest that the organization is open to working with countries to develop coordinated and comprehensive policies to regulate crypto assets. For example, India, which currently holds the G20 Presidency, has asked the IMF and the Financial Stability Board (FSB) to jointly prepare a technical paper on crypto assets that could be used to formulate such policies.

“Developing effective policies and regulations for crypto assets” seems to be the underlying agenda. There are various reasons for the IMF’s stance on cryptocurrencies. One of the reasons is that the IMF seeks to protect the stability of the global financial system. The use of cryptocurrencies has the potential to disrupt traditional financial systems and destabilize the global economy. By exerting control over cryptocurrencies, the IMF hopes to minimize the risks associated with this disruptive technology.

IMF’s stance on cryptocurrencies is that it believes in the potential benefits of the underlying blockchain technology. Blockchain can potentially increase transparency and accountability in financial transactions, which could help reduce corruption and fraud. By exerting control over cryptocurrencies, the IMF hopes to encourage the development of blockchain technology while minimizing the risks associated with cryptocurrencies.

Some argue that the decentralized nature of cryptocurrencies is one of their greatest strengths and that too much control could undermine this feature. My concern is that the IMF’s desire for control over cryptocurrencies could lead to overly restrictive regulations that restrict innovation and growth in the industry. Apart from losing out on innovation, I would like to point out a few other pointers that I picked up while reading related news articles.

  1. The use of the term “digital money”. Speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained, “We are very much in favour of regulating the world of digital money”. In my humble opinion, crypto is not digital money. I would consider crypto as crypto assets, not money. If she considers crypto as digital money, USD is also digital money; it will confuse normal people. It also can be misinterpreted that IMF is considering crypto as a legal tender.
  2. CBDC is not cryptocurrency. According to an interview with Bloomberg published on February 27, she responded to a question on her recent comments about a potential complete ban on cryptocurrencies. “Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.” Again, this statement makes things more confusing. Central bank digital currencies, CBDCs, are a new form of a digital currency issued and regulated by central banks. It has nothing to do with cryptocurrencies.
  3. Fully backed by? In the same interview, she also said that fully-backed stablecoins create a “reasonably good space for the economy,” but non-backed crypto assets are speculative, high risk, and not money. The term “fully backed” should be appropriately defined, fully backed with high-quality and liquid assets or 1:1 fiat currency or another altcoin. Some stablecoins, such as Tether, are backed by a mixture of cash and other assets but are not transparent about the types of assets doing the backing. In fact, Canadian regulators have classified fiat-backed stablecoins as securities, indicating that stablecoins may be subject to securities legislation. It is important to carefully evaluate the backing of stablecoins before considering them as a stable investment option.
  4. CBDC is 100% not stablecoin. CBDC refers to a digital form of a country’s currency that is issued and backed by a central bank. On the other hand, stablecoins are cryptocurrencies that are designed to maintain a stable value relative to a certain asset, such as the US dollar or gold. For instance, the UK is exploring the development of a CBDC, known as the Digital Pound, which would take at least five years to develop, according to the deputy governor of the Bank of England. The Bank of England is exploring both wholesale and retail CBDC. Still, they see limitations, and the design and structure of the digital pound could vary greatly depending on its intended use.

IMF may be clear on all these terms, but I would like to highlight that the interchange and usage of words in interviews must be consistent to avoid misunderstanding.

Coming back to the core topic, the IMF’s stance on cryptocurrencies is geared towards exerting control rather than an outright ban. The organization believes that cryptocurrencies have the potential to disrupt traditional financial systems and destabilize the global economy, but it also recognizes the potential benefits of blockchain technology.

Who will have the ultimate control?

The debate over the role of cryptocurrencies in the global financial system is likely to continue for some time to come.

Source: https://www.securities.io/imf-wants-control-over-crypto-than-banning-it-outright/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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SEC chair Gensler confirms “everything other than Bitcoin” is a security: Implications and analysis

SEC chair Gensler confirms “everything other than Bitcoin” is a security: Implications and analysis

SEC Chair Gary Gensler reiterated that Bitcoin is not a security but a commodity under the Commodity Futures Trading Commission (CFTC) purview. He also stated that “everything else other than bitcoin is a security,” which has significant implications for regulating cryptocurrencies and digital assets in the United States.

Gensler’s statement reflects the SEC’s long-held view that many cryptocurrencies and digital assets are securities under U.S. law. The SEC’s definition of a security is broad — it includes any investment contract in which an individual invests money in a common enterprise with the expectation of profits solely from the efforts of others. In other words, if an asset is sold as an investment with the expectation of profit based on the efforts of others, it is likely to be considered a security.

Gensler’s comments have sparked debate in the cryptocurrency community. Some argue that his view is overly broad and that many digital assets do not fit the SEC’s definition of a security. Others argue that the SEC’s approach is necessary to protect investors from fraudulent or manipulative activities in the cryptocurrency market.

One of the key implications of Gensler’s comments is that many digital assets may be subject to SEC regulation. This could include initial coin offerings (ICOs), a crowdfunding campaign where investors purchase digital tokens in exchange for cryptocurrencies like Bitcoin or Ethereum. Many ICOs have been criticized for their lack of transparency and accountability, and the SEC has taken enforcement action against several ICO issuers in recent years.

Another implication is that exchanges that trade digital assets may be subject to SEC oversight. Under U.S. law, exchanges facilitating securities trading must register with the SEC and comply with various regulations. If the SEC views many digital assets as securities, then exchanges that trade those assets may also be required to register with the SEC and comply with its regulations.

His comments suggest that the SEC may take a more aggressive approach to regulating the cryptocurrency market. This could include increased enforcement actions against issuers of digital assets considered securities and against exchanges that facilitate trading those assets. It could also lead to new regulations to increase transparency and accountability in the cryptocurrency market.

The SEC’s approach to regulating cryptocurrency has been debated for several years. Some argue that the SEC’s current approach is too cautious and stifling innovation in the cryptocurrency space. Others argue that increased regulation is necessary to protect investors from fraud and manipulation.

Gensler’s comments suggest that the SEC will likely take a more assertive approach to regulate the cryptocurrency market in the coming years. This could include increased enforcement actions, new regulations, and closer scrutiny of digital assets and exchanges that operates in the U.S.

Maybe we can take a step back to look into a few things. Firstly, it’s important to understand the context of Gensler’s statement. As mentioned earlier, Gensler reiterated the SEC’s stance in an interview with CNBC in July 2022 that Bitcoin is not a security but a commodity that falls under the Commodity Futures Trading Commission’s jurisdiction. He did not label other digital assets, avoiding answering the question directly. However, in a tweet by Jake Chervinsky in February 2023, it was suggested that Gensler may have prejudged that every digital asset aside from Bitcoin is a security.

Then my question is: What exactly is a security? In the US, the Securities Act of 1933 defines a security as any investment contract, note, stock, or any other type of investment in a common enterprise with the expectation of profits solely from the efforts of others. In simpler terms, it means an asset representing an ownership interest or a right to receive future profits or cash flows from a third party.

Suppose we consider Gensler’s statement that everything other than Bitcoin is a security. In that case, it implies that most digital assets such as Ethereum, XRP, and other cryptocurrencies would be considered securities under US law. This means that they would be subject to SEC regulations and oversight. It’s worth noting that this is not a new position for the SEC. For years, the SEC has warned cryptocurrency companies that their tokens could be classified as securities if they meet certain criteria.

The implications of this classification are significant. If a digital asset is classified as a security, the issuer must comply with SEC regulations, including registration and disclosure requirements. It would also have to follow strict trading, reporting, and investor protection rules. Additionally, investors would be protected under federal securities laws, which could increase their confidence in the digital asset market. However, it could also lead to additional costs and regulatory burdens for the companies issuing digital assets.

My opinion on this matter is that while Gensler’s statement may have been perceived as a blanket statement, the SEC’s approach to regulating cryptocurrencies is nuanced and fact-specific. The SEC has been clear that it will evaluate each token on a case-by-case basis to determine whether it meets the legal definition of a security. In other words, just because a digital asset is not Bitcoin does not automatically mean it’s a security.

Furthermore, regulatory oversight is necessary for the cryptocurrency market to mature and gain mainstream adoption. The lack of clear regulations has been a major roadblock for institutional investors, who are hesitant to invest in a market perceived as unregulated and risky. Clear regulations would also protect retail investors who may not have the knowledge or resources to navigate the complex world of cryptocurrencies.

To conclude, while Gensler’s statement that “everything other than Bitcoin” is a security may have caused some alarm in the cryptocurrency community, we believe that it’s important to view it in the context of the SEC’s broader approach to regulating digital assets. The SEC’s focus on investor protection and market integrity is crucial for the long-term success of the cryptocurrency market.

As the market continues to evolve, we expect that the SEC’s approach will continue to evolve, and we look forward to seeing how it develops. Meanwhile, I hope SEC can be more precise and take a more responsible stance when putting statements out in the market.

 

Source: https://cryptoslate.com/sec-chair-gensler-confirms-everything-other-than-bitcoin-is-a-security-implications-and-analysis/

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Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Anndy Lian: “Bitcoin ETF could attract more than $400 million in investment accordingly to Bloomberg. This could triple the amount. I am optimistic.”

Anndy Lian: “Bitcoin ETF could attract more than $400 million in investment accordingly to Bloomberg. This could triple the amount. I am optimistic.”

How Did Investors React To bitcoin’s ATH?

Bitcoin’s recent price surge ensured the cryptocurrency reached an all-time high, breaking beyond the $66,000 barrier for the first time, retaining its position as the world’s most valuable cryptocurrency. The market cap of all cryptocurrencies surpassed $2.53 trillion in May this year, reaching an all-time high of $2.64 trillion because of the latest Bitcoin price spike.

 

Bitcoin’s surge is the number one topic being discussed in our social media and Telegram groups at the moment. Many investors are astonished as to why Bitcoin’s price has risen so dramatically. Let’s look at what this implies for investors as I examine the reasons why the Bitcoin price hit an all-time high this time.

What’s causing Bitcoin’s price to rise?

The launch of the first Bitcoin exchange-traded fund (ProShares Bitcoin Strategy ETF, trading under the ‘BITO’ ticker on Wall Street) on the New York Stock Exchange, is the key driving force behind this Bitcoin price spike. Many crypto sector investors around the world have been advocating the advantages of crypto ETFs for years, most notably Cameron and Tyler Winklevoss, famous for their involvement in Facebook who had their Bitcoin ETF turned down by the Securities and Exchange Commission (SEC) in 2017. The success of this Bitcoin ETF has in turn set a precedent for other cryptocurrency ETFs to pass the audit, and it is also the primary driver for the recent rise in cryptocurrency values. The ProShares ETF witnessed

 

“one of the biggest first days on record for ETFs, raking in $550 million from crypto-hungry investors. Overall, more than $1.01 billion of shares changed hands,”

 

according to a report on business news channel CNBC.

 

Bitcoin Exchange Traded Funds (Bitcoin ETFs) are actually Bitcoin ‘futures’, not direct investments in Bitcoin. Futures are a kind of financial derivatives, which are essentially an agreement to buy and sell assets at a future date, meaning the assets are not owned by the investors. The fund’s main feature is that it allows non-crypto investors to buy Bitcoin without having to register a separate cryptocurrency trading account.

 

ProShares CEO Michael L. Sapir confirmed:

 

“BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a bitcoin wallet.”

 

Simply put Bitcoin ETFs are not the same as buying Bitcoin directly.

 

“The futures-linked fund is subject to rollover risk, meaning that when it periodically closes positions in the futures contracts it holds, it can find itself, as is the case now, repurchasing new batches of future-dated contracts for more money. The situation, known as “contango,” eats into profits,”

 

confirmed the report in Fortune.

 

So, if you’re thinking about buying Bitcoin ETFs, make sure you know everything there is to know about futures trading.

What does the Bitcoin price surge mean?

I believe that if you plan to invest in cryptocurrencies for the long term rather than the short term, the latest all-time high of Bitcoin should be treated in the same way as any other volatile asset.

 

The benefit of buying and holding cryptocurrencies is that you don’t have to feel driven to trade when the price is extremely high or low because you’re working within a longer investing framework. Because of the volatility of cryptocurrencies, the market rises and falls to new highs and lows.

 

If you’ve done your homework and have a well-defined investment strategy, these price fluctuations shouldn’t affect your long-term position or approach. The best advice is to carefully weigh up the pros and cons of buying Bitcoin for the long term and make sure you have a well-thought-out crypto investment plan at the outset.

 

To put it another way, some active investors may believe now is a good opportunity to profit, while others believe Bitcoin will continue to grow in value. It was reported recently in Forbes that a panel of 50 bitcoin and cryptocurrency experts has predicted,

 

“the bitcoin price will continue to climb through 2021, hitting highs of around $80,000, before surging to $250,000 by 2025 and a staggering $5 million per bitcoin by 2030”.

 

When compared to buying and holding cryptocurrencies, active trading has the advantage of allowing investors to profit from market fluctuations and new all-time highs.

 

I feel that the launch of the Bitcoin ETF is an important step forward in the mainstream acceptance and usage of cryptocurrencies, which will benefit the whole crypto industry. Indeed, in a recent Motley Fool report, it’s suggested that Ethereum, crypto’s second-biggest player could be an even better bet.

 

“I think the long-term application building potential of the Ethereum network makes Ether a more attractive option for investors looking to benefit from the evolution of blockchain technologies,”

 

argued Keith Noonan.

 

“Ether’s price per token has surged roughly 458% across 2021’s trading. Despite significantly outpacing Bitcoin’s gains across the stretch, I still think Ethereum stands a good chance of outperforming Bitcoin over the long term,”

 

he added.

 

The Bitcoin ETF has helped institutional investors gain confidence and may open the door to new retail investors. According to the latest research, more than 50 million people in the US plan to invest in cryptocurrencies next year, and the Bitcoin ETF no doubt will play a crucial role in that adoption process.

 

The cryptocurrency sector has come a long way since Bitcoin’s launch in 2009, but there is still a long way to go and numerous technical obstacles to overcome before the industry reached mainstream adoption, with the blockchain sector as a whole still missing its “killer app,” and still awaiting its “Netscape moment.”

 

The crypto community has been waiting for its own version of this moment for years.

 

“And it may have just arrived with the first U.S. Bitcoin ETF begin trading, with more are on the way, and Bitcoin and Ethereum both hitting all new all-time highs,”

 

according to Decrypt’s executive editor Jeff John Roberts.

 

The future regulation of cryptocurrencies in many nations is still an “unknown possibility”. Individual countries are expected to introduce stronger regulatory frameworks and plans relating to the Bitcoin sector soon. As reported in the FT on October 13, the SEC’s indication that it is going to look more closely at how it regulates complex exchange-traded products has implications for future bitcoin ETF rules:

 

“Last week, SEC Chair Gary Gensler directed staff to study the risks of ETFs employing strategies ‘more complex than typical stocks and bonds’ and draft potential rules to address those concerns,”

 

the FT confirmed.

 

“Bitcoin ETF could attract more than $400 million in investment accordingly to Bloomberg. This is just the beginning based on what I see. Give it a few more months, we could see double of what we see right now. Australia’s corporate regulator has given the green light to a range of cryptocurrency-related ETFs, which could see Bitcoin and Ethereum-backed investment funds trading on the ASX in the coming months. This could triple the amount. I am optimistic.”

 

Anndy Lian, Chairman, BigONE Exchange commented on Twitter.

 

To conclude, as a result, I advise investors who are taking advantage of the current bull market to be prepared. The Bitcoin market may actually become more volatile because of planned regulatory reforms.

 

by Jenny Zheng @jennyzhengEarly crypto advocate | Investor | PR Expert | Cofounder of Blockcast.cc

 

Original Source: https://hackernoon.com/how-did-investors-react-to-bitcoins-ath

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j