IMF demands “coordinated, consistent, and comprehensive” crypto regulation
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It is clear that regulatory organizations such as the International Monetary Fund (IMF) and the US Securities and Exchange Commission (SEC) are not getting along with cryptocurrencies, as the increased scrutiny of cryptocurrencies and companies in recent months has shown. However, this goes against common sense given the growing importance of decentralized financial systems and cryptocurrencies to financial systems.
Crypto-assets have been around for the better part of a decade, but only recently came into the limelight. However, due to their recent success, there is now an urgent need to create a new legislative framework that takes into account the numerous ways in which crypto-assets can be used.
Not all of them can be classified as financial instruments and securities, as some can act as providers of decentralized web and storage services, gaming and streaming platforms, and even alternatives to fiat money.
Regulatory authorities have found it difficult to keep up with the ever-changing cryptocurrency market and routinely keep abreast of technical breakthroughs in the industry. In addition to this, monitoring network activity and events is not a simple task. This is especially true when crypto mixing services like Tornado Cash exist to protect the anonymity of their customers.
Furthermore, there is no standard vocabulary that is universally applicable to the many aspects of the crypto world. For example, the current regulation does not recognize new jobs such as miners, validators or protocol developers. This is the case with many cryptocurrencies. Financial market participants are often authorized to engage in limited activities that are predetermined.
Participants may be difficult to identify due to the underlying technology, may act randomly or voluntarily in the system, and may not automatically inherit related governance, prudence and fiduciary obligations. These characteristics can make it difficult to determine who participates in the system. On the other hand, sorting out conflicting tasks accumulated in a few prominent organizations such as bitcoin exchanges may also be a problem that regulators need to consider.