Crypto Needs Comprehensive Policies to Protect Economies and Investors

By:Tobias Adrian, Dong He, Arif Ismail & Marina Moretti (IMF Blog)

The global push for clearer policies on crypto assets has gained significant momentum under India’s G20 Presidency. As this work progresses, it’s essential to acknowledge the progress made so far, though more effort is needed, particularly in implementing global standards.

The failures of the FTX crypto trading platform and the Terra Luna stablecoin last year underscored the urgent need for clear policies to protect investors and prevent abuse. Despite recent industry setbacks, investor optimism continues to resurface periodically, as demonstrated by Bitcoin nearly doubling in value this year. However, without robust safeguards, the heightened risk of fraud and misconduct could undermine investors’ expected returns.

While some policymakers have taken important steps to protect consumers and ensure financial integrity, it’s also crucial to consider the broader implications of crypto assets. These assets, especially stablecoins tied to hard currencies, have the potential to supplant official currencies and significantly influence monetary and fiscal policies, particularly in emerging markets and developing economies. This highlights the need for a comprehensive, consistent, and coordinated policy approach to crypto.

Earlier this year, we presented an assessment of the macroeconomic implications of crypto assets to the G20 Presidency, building on the recommendations outlined in the “Elements of Effective Policies for Crypto Assets,” which were endorsed by the IMF Executive Board in February…