The popularity and demand for cryptocurrencies are astonishingly high, and it is expected to remain the same or increase in the future. In a recent blog post, the International Monetary Fund (IMF) discuss there concerns about the governance of cryptocurrency. Fabio Natalucci, Dimitris Drakopoulos and Evan Papageorgiou, are the authors of the blog post.
There are many important points presented in the post, such as, the problem of global oversight coordination. According to their writings on the post, they write that;
“The global nature of crypto assets means that policymakers should enhance cross-border coordination to minimize the risks of regulatory arbitrage and ensure effective supervision and enforcement”. “National regulators should also prioritize the implementation of existing global standards”.
Other issues discussed are that of enormous energy use and extreme periods of market volatility. The IMF states that outages experienced by crypto exchanges during periods of market volatility have not caused palpable negative effects, however, their impact keeps growing as cryptocurrencies are becoming more mainstream.
Nevertheless, the blog post admits that “consumer protection risks remain substantial given limited or inadequate disclosure and oversight’. As describing the widespread adoption of digital assets as “cryptoization,” the post continued pointing out the benefits of cryptocurrencies as well as the disadvantages.
Regarding regulatory bodies, in the US the SEC has taken on the challenge of governmental oversight of cryptocurrency. Their actions are being ridiculed for selecting what crypto projects can operate in the ecosystem rather than protecting citizen form market corruption.