'Blanket crypto ban hard to implement'

A blanket ban on crypto assets may be hard to pull off, and nations must instead apply rules on money laundering and terror finance to these assets and service providers, an influential policy paper said, while noting that increased adoption of these assets could undermine monetary policy transmission.

- Rhik Kundu

The joint paper from the International Monetary Fund (IMF) and G20’s risk watchdog, the Financial Stability Board (FSB), has attempted to offer a roadmap for regulating crypto assets and helping nations integrate virtual digital assets into their digital financial systems.

“They (blanket bans) also tend to increase the incentives for circumvention due to the inherent borderless nature of crypto assets, resulting in potentially heightened financial integrity risks, and can also create inefficiencies," the paper said.

The paper also called on nations to implement the Financial Action Task Force (FATF) anti-money laundering and counter-terrorist financing (AML/CFT) standards for virtual assets (VAs) and virtual asset service providers (VASPs). It also recommended developing a common framework and collection of ‘test data’ on digital money and crypto assets for being used as a means of payment that are enabled by fintech firms.