The position of the International Monetary Fund (IMF) on the prohibition of cryptocurrencies has changed. They allegedly made the claim that such a strategy might not be able to adequately mitigate related risks and might also prevent countries from receiving the rewards.
The IMF stressed the need to address the factors driving cryptocurrency demand and improve transparency instead of enacting bans in a recent website article on the adoption of central bank digital currencies (CBDCs) in Latin America and the Caribbean.
The IMF continued by highlighting the significance of meeting individuals’ unmet digital payment demands and accounting for transactions involving crypto assets in national statistics in order to comprehend the market.
Notably, despite Argentina banning the use of cryptocurrencies in May, Latin American nations like Brazil, Argentina, Colombia, and Ecuador were among the top 20 adopters of crypto assets last year.
In light of this, the IMF suggests that looking at different ways to manage crypto risks is a wonderful alternative to outright prohibitions. The Bahamas and Nigeria have already issued their own CBDCs, and many more nations are actively investigating the use of CBDCs today. This month is predicted to see the publication of a draft law in the European Union governing the digital euro.
Recommendations Reflexive on Actions
The IMF’s viewpoint is consistent with its continuing initiatives to create an international CBDC platform. The group thinks that because these areas are leaders in the adoption of digital currency, concentrating on these factors is essential because they can teach other parts of the world important lessons.
It is important to remember that cryptocurrencies offer a number of benefits, including defense against hazy domestic macroeconomic conditions and the capacity to get around money prohibitions.
According to the IMF, they also help unbanked communities become more financially included, enabling quicker and less expensive payments, and strengthening competition. The IMF has acknowledged the dangers posed by cryptocurrencies, but they have also emphasized the necessity of putting in place strict controls for this new asset class.
Additionally, it emphasized the potential advantages of CBDCs, claiming that well-designed CBDCs can advance financial inclusion in the region of Latin America and the Caribbean and improve the usability, robustness, and efficiency of payment systems. The IMF’s opposing position contrasts with the United States’ strong approach to limiting the growth of the crypto industry as a whole.
Crypto Market Remains Bullish Despite Bitcoin’s Retreat
Despite reports of a potential cryptocurrency prohibition, the crypto markets have stayed bullish this week. In which the particular industry has maintained its current gains. Over the last 24 hours, the entire market capitalization has remained stable at $1.21 trillion.
Bitcoin, on the other hand, suffered a little setback, sliding one percent and failing to hold the $30,000 mark. Bitcoin was trading at $29,903 at the time of writing. Despite this momentary slump, the cryptocurrency has increased by 17% in the last seven days.
Other cryptocurrencies have also cooled off following the spectacular surge earlier this week.