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Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets
Author:
Parma Bains
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Arif Ismail
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Fabiana Melo
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Nobuyasu Sugimoto
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Series:
Fintech Notes
Volume/Issue:
Volume 2022: Issue 007
Language:
English
Publication Date:
26 Sep 2022
DOI:
https://doi.org/10.5089/9798400221361.063
ISBN:
9798400221361
ISSN:
2664-5912
Pages:
45
Keywords:
• Crypto; crypto asset; cryptocurrency; blockchain; stablecoin; DLT; regulation; Economic sectors; Emerging technologies; Financial crises; Financial sector policy and analysis; Financial sector stability; Financial services; Fintech; Systemic risk; Technology; IMF FINTECH note 2022/007; crypto Ecosystem; Bali Fintech agenda; market infrastructure; Virtual currencies; Blockchain and DLT; Securities markets; Global
Legal-disclaimer:
Fintech Notes offer practical advice from IMF staff members to policymakers on important issues. The views expressed in Fintech Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Unbacked crypto assets are the oldest and most popular type of crypto assets, relying not on any backing asset for value but instead on supply and demand. They were originally developed to democratize payments but are mostly used for speculation. Crypto assets were designed to disintermediate financial services, but centralized entities, such as exchanges and wallet providers, offer key functions to users and sustain the necessity of trust in one or several entities. At present, many of these entities are not covered by existing conduct, prudential, or payment regulations and can generate risks to market integrity, market conduct, and potential financial stability. We recommend that global bodies work to develop common taxonomies that can inform global and cross-sectoral standards while improving data insights. Standards should be risk-based, with greater requirements on entities and activities that generate more risk. Crypto asset service providers that deliver core functions and generate key risks should be licensed, registered, or authorized.
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Cover FinTech Notes
FinTech Notes
ISSN:
2664-5912
Publisher:
International Monetary Fund
Volume 2022: Issue 007