Is the multilateral lending institution limiting useful DLT experiments in developing countries, or is it saving crypto from itself?
Is the International Monetary Fund (IMF) really hostile to cryptocurrencies? Many in the cryptocurrency and blockchain space think so. In January, the fund asked El Salvador to give up Bitcoin
as a legal tender.
In May, it reportedly ordered Argentina to limit the trading of cryptocurrencies as the price of an IMF loan extension, and also recently warned the Marshall Islands that elevating a digital currency to legal tender status could “risk the macroeconomic and financial increasing stability. as financial integrity.”
“I think the IMF is an implacable enemy of cryptocurrencies,” David Tawil, president and co-founder of ProChain Capital, told Cointelegraph. Since Bitcoin and other cryptocurrencies are “issued” by non-state entities and have no borders, “cryptocurrencies have the potential to be ubiquitous, which could significantly reduce the need for the IMF,” a UN Financial agency.
“Bitcoin is against everything the IMF stands for,” Alex Gladstein, director of strategy at the Human Rights Foundation, told Politico in June. “It is outside money that is beyond the control of these alphabet soup organizations,” while Kraken Dan Held simply tweeted, “The IMF is evil,” in response to the Fund’s reported actions in Argentina.
Still others believe that this multilateral lending institution serving some 190 countries, and which has long been a lightning rod for criticism in the developing world, can take a more nuanced view of cryptocurrency.
A broad view of crypto assets?
In a September report, “Cryptocurrency Regulation,” the IMF appears to have no problem with the existence or even proliferation of non-governmental digital currencies. In fact, he called for a “global regulatory framework” for cryptocurrencies to bring order to the markets “and a safe space for useful innovation to continue.”
“The IMF has taken a very broad view of crypto-assets,” John Kiff, managing director of the CBDC think tank and until 2021, senior financial sector expert at the IMF, told Cointelegraph, especially considering some of the recent cases see. above. He added:
“The opinions of the Marshall Islands and El Salvador referred to the governments of the countries adopting cryptocurrencies as legal tender when their account currencies were already well established. And the negative opinions focused mainly on the macroeconomic impact to hitch their tax wagons to crypto.
Institutionally speaking, “it’s true that the IMF is skeptical of cryptocurrencies, and it was hard on El Salvador,” Josh Lipsky, senior director of the Center for Geoeconomics at the Atlantic Council, told Cointelegraph. But that is because the fund was concerned about the financial vulnerability of the nation’s economy. The IMF “must bail them out” as long as El Salvador defaults on its international debt payments.
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Meanwhile, “Argentina has done something like 20+ loan programs over the years, so you can’t really go back to the IMF and renegotiate [its loans] and also do crypto experiments,” added Lipsky, who previously served as a consultant. the IMF and a speaker to Christine Lagarde. The mayor of Buenos Aires, a supporter of cryptocurrencies, has developed plans that allow city residents to pay their municipal taxes in cryptocurrency. “That raised some eyebrows” in the background, Lipsky commented.
Even Tawil agreed that the IMF was justified in forcing “certain policy options, such as austerity measures or taxes or the abolition of government subsidies that cannot be financially supported” under certain circumstances. If a country has “terrible policies” that make it constantly dependent on fund support, then “the IMF will use its credit rating to influence policy choices.”
Money laundering risks
In relation to the Marshall Islands’ attempt to implement a sovereign digital currency, known as SOV, as a second legal tender, the IMF’s Yong Sarah Zhou cites not only the threats to financial stability, but also “the fight against money laundering and the financing of terrorism.AML/CFT risks).
However, Simon Lelieveldt, a paid regulatory consultant in blue