Traditional Banking at Odds With Design of Crypto: IMF Director
In a recent interview, Tobias Adrian, director of monetary and capital markets at the IMF, claimed a fundamental conflict between conventional banking regulation techniques and the crypto sector.
Adrian remarked that institutions must be able to ensure that what is happening is legitimate. However, he opined that in a world where transactions are essentially anonymous, that is challenging to achieve.”
The official added, “And so, that’s a fundamental clash between traditional banking regulatory approaches and the crypto world.”
IMF Director Uncertain That a Crypto Spring Will Follow Winter
The IMF Director told Yahoo Finance that several of the existing arrangements in crypto have become ineffective. Adrian said, “Well, winter implies that there’s spring and summer one day. But it’s not entirely clear that we will go back to the kind of valuations that we saw in the past, right?”
By the end of the month, according to cryptocurrency supporter Michael Novogratz, there is a high probability that Bitcoin could reach $30,000 again.
Meanwhile, the official also opined on the Fed’s decision to turn down crypto bank Custodia’s application. He said it ensures that the banks’ risk exposure is limited. Especially when the risks are very challenging to manage, the official said.
Concerning the broader regulatory space, Adrian said,
“I mean, there’s a concerted effort by regulators around the world led by the FSB, the Financial Stability Board, which is also housed in Basel to have a comprehensive, coordinated, and coherent regulation for crypto around the world.”
Meaningful Sectoral Policy in the U.S.
In a statement regarding El Salvador’s economy last week, the International Monetary Fund (IMF) lambasted the country for its choice to make Bitcoin legal tender. Meanwhile, the US needs help to enforce crypto legislation faster.
Adrian believes that the crypto sector has very little prudential and investor protection. He stated, “There’s very little assurances of how a customer assets are being dealt with.”
Meanwhile, all-encompassing crypto regulations and laws for stablecoins have run into parliamentary roadblocks in Congress since 2022.
The sector is far from making meaningful policy decisions thanks to the first legislative session of 2023. The session, which ended this week, revealed a political party split on how to regulate the sector.