13 Dec 2021 Anthony Lehrman
Crypto To Be Regulated Globally, The IMF States
The International Monetary Fund (IMF) delved deeper into the regulatory realm, as the regulatory institution published a blog post, outlining some possible regulatory improvements.
The IMF also noted that crypto assets are rapidly revolutionizing the entire global financial system, but the current state of regulations makes it hard to keep an eye on the risks, which are common in the crypto market.
The crypto sector exploded in the past five years, which made cryptos inevitably tied to the world of traditional finance, despite still lacking clear regulatory status. Furthermore, the financial institution emphasized that such interlinking between two completely different systems may turn out to be a serious risk to modern economies unless global financial regulators act quickly to mitigate the threats and harness the revolutionary power of crypto.
“Such risks underscore why we now need comprehensive international standards that more fully address risks to the financial system from crypto assets, their associated ecosystem, and their related transactions while allowing for an enabling environment for useful crypto asset products and applications.” the IMF stated.
The report also stresses the need for “a comprehensive and coordinated approach to managing risks to financial stability”, in order to stop entities from migrating to jurisdictions with lesser regulatory requirements and mitigate the chance of regulatory arbitrage.
However, in order to make regulations work on a global level, the new policy must provide a clear separation between the types of crypto-asset service providers, as well as the main purpose of any given cryptocurrency. For example, entities that offer storage, transfer, settlement, and custody of reserves and assets must be licensed and authorized, according to the IMF.
Also, crypto investment products should be easily distinguishable from payment services and products.
The IMF post comes right as Bitcoin records 90% of its total supply being mined, which is yet another milestone for the world’s largest crypto to date. According to various sources, 18.89 million Bitcoins — of a maximum of 21 million — are now on the open market.
However, the remaining 2,11 million BTC should be harder and harder to mine, with an expected 100% supply in circulation expected for February 2140. Furthermore, halving events make it harder and harder for Bitcoin miners to earn profits, effectively reducing the amount of new Bitcoin, which enters circulation until there is nothing more to mine.
Nevertheless, the amount of Bitcoin in circulation may largely differ, as data from Chainalysis suggest that around 3.7 million BTC has been lost due to various causes like losing one’s private keys to even death.
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