IMF’s Gita Gopinath wants a global policy on cryptocurrencies – not a ban

• International Monetary Fund (IMF) chief economist, Gita Gopinath, believes that cryptocurrencies should be regulated rather than be banned.
• According to her, investment rules for other assets should apply to crypto assets too.
• She said that banning cryptocurrencies will be a particular challenge for emerging markets, like India.

While central banks in various countries want cryptocurrencies to be banned, the industry has received support from the International Monetary Fund (IMF). Speaking at an event organised by the National Council of Applied Economic Research (NCAER), Gita Gopinath, who will soon become the first ever Deputy Managing Director of the IMF, implored emerging economies to regulate cryptocurrencies instead of banning them.

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“I think cryptocurrencies are a particular challenge for emerging markets. It would seem that cryptocurrencies are more attractive for emerging markets compared to developed economies. However, emerging markets have exchange rate controls, capital flow controls, and cryptocurrencies can impact that,” said Gopinath.

Further, Gopinath said that there are challenges in “truly banning crypto” since many exchanges are located offshore and aren’t subject to a country’s regulations. She said that there is an urgent need for global policy on cryptocurrencies since the ease of transactions in this space means that no one country can tackle the problem alone.

Regulate, not ban cryptocurrencies
According to Gopinath, the fact that people are using cryptos as an investment asset should mean that the rules associated with other investment classes should apply to these digital assets as well – banning cryptos will pose challenges for policy makers and instead, a global policy on cryptocurrency was the need of the hour.

Gopinath’s comments come at a time when the Indian government is looking to table a bill on cryptocurrencies in Parliament. While earlier reports, based on the agenda for the ongoing Winter Session of the Parliament, had suggested an overarching ban on cryptos, such fears have more or less been allayed.

Instead, the Indian government is expected to bring a bill regulating cryptocurrencies and their trading in the country. However, the Winter Session of the Parliament ends on December 23, and a decision on the bill hasn’t been taken yet. So, it may not be tabled after all. The crypto bill also appeared on the agenda in January, ahead of the Budget session, but wasn’t tabled then either.

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