Rules, infrastructure required to avoid risks of cryptocurrencies: IMF chief

ISTANBUL

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Thursday a set of rules and the establishment of infrastructure are required to avoid the risks of cryptocurrencies.

"Crypto assets are not going away. Bitcoin is trading at its highest value since April 2022. The crypto market cap doubled over the last year," she said at the MOEF-BOK-FSC-IMF International Conference on Digital Money in Seoul, South Korea.

"Also, crypto asset adoption is high, especially in emerging market economies like India, Nigeria, and Vietnam,” she said. “The challenge is that high crypto asset adoption could undermine macro-financial stability.”

Georgieva said establishing clear tax rules and providing a solid legal foundation with a clear classification of crypto assets is needed to avoid anti-money laundering and financing terrorism.

"Countries are implementing this guidance—turning it into legislation, training supervisors and overseers, and enforcing compliance. Korea, for instance, is showing leadership by amending its anti-money laundering law and setting up new legislation on crypto assets," she said.

The IMF chief warned that the use of a crypto asset, instead of domestic currency, can undermine monetary policy transmission, while it can also cause capital flow management measures, such as limits on foreign currency holdings, to be circumvented.