IMF & South Korea Calls For Swift Regulations To Mitigate Crypto Risks

In a compelling address at a digital currency conference in Seoul, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, emphasized the urgent need for crypto regulations and infrastructure to counter the risks posed by the rising tide of cryptocurrencies. Acknowledging the innovation potential, Georgieva underscored the importance of establishing robust frameworks without stifling progress.

IMF’s Call For Crypto Regulation

The head of the IMF, Kristalina Georgieva, issued a stern warning about the destabilizing impact of unregulated cryptocurrencies on global financial stability. According to her, the rapid adoption of crypto assets could jeopardize macro-financial stability, potentially disrupting monetary policy transmission, capital flow management measures, and fiscal sustainability, Reuters reported today.

Meanwhile, Georgieva emphasized a proactive stance, expressing a commitment to building a more efficient, interoperable financial system. The aim is to mitigate crypto risks through regulations and leverage technologies for improved infrastructure, not to revert to a pre-crypto era but to establish a framework that encourages innovation.

Emphasizing the dual role of rules in fostering innovation, she stated, “Good rules can spur and guide innovation.” Notably, this underscores the IMF’s commitment to balancing oversight while encouraging advancements in the digital financial landscape.

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Policymakers’ Dilemma: Embrace or Be Left Out

During a panel discussion on the development of digital money, Georgieva emphasized the pivotal role policymakers play. She asserted that policymakers have the choice to either actively participate and contribute to the improvement of the digital financial landscape or risk being left behind as the transformation unfolds independently.

Georgieva noted a “tremendous interest” in mutual learning, with a particular focus on insights from emerging markets. She singled out India for its commendable strides in digital public infrastructure. Moreover, she highlighted the significance of learning from advanced economies’ historical experiences with money, considering it a valuable resource for guiding the ongoing evolution of digital currencies.

Meanwhile, amid the global push towards crypto safety, South Korea stands out as a key player. The country’s vice financial regulator chief, Kim So-young, emphasized a balanced approach to regulating cryptocurrencies, considering both investor protection and technological innovation. This announcement came during the Seoul conference, jointly organized by the South Korean government, the central bank, and the IMF.

Notably, the Financial Services Commission (FSC) in South Korea has recently outlined detailed regulations under the Virtual Asset User Protection Act, set to take effect on July 19, 2024. These regulations aim to create a secure environment for users and promote integrity in the virtual asset market.

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