Emerging economies should regulate crypto, need global policy urgently: IMF’s Gopinath

Emerging economies should not outright ban cryptocurrencies, but instead regulate them, suggested Gita Gopinath, chief economist of the International Monetary Fund (IMF). Addressing an event at the National Council of Applied Economic Research (NCAER), Gopinath also highlighted the global challenges of regulating cryptocurrencies across geographies. 

“There are challenges to banning it, and whether you can end up with truly banning crypto -- because many exchanges are offshore, and they are not subject to regulations of a particular country,” emphasised Gopinath, when talking about the prospect of cryptocurrencies being banned in India. 

On this note, Gopinath called out for a collective, global policy on regulating the use and application of cryptocurrencies. “No individual country can solve this problem on their own, and there is a need for global policy on it urgently,” she further added. 

Also read: Blockchain will redefine the financial world: Mukesh Ambani

Gopinath’s statement largely backs up assessments made by Finance Minister Nirmala Sitharaman, who called for collective, global action to regulate an evolving technology such as cryptocurrencies. 

“Even as we are thinking about at a national level, there should simultaneously be a global mechanism through which we are constantly monitoring the movement of technology -- whether it is your cryptocurrency, whether it is tech-driven payment system, data privacy, whether it is ensuring that data is used ethically,” Sitharaman said at a fintech event earlier this month. 

Gopinath’s insights come as the Indian government prepares to introduce a law that regulates the cryptocurrency space in India. While the bill was earlier said to be gearing up for a ban on private cryptocurrencies in the country, more recent reports have stated that the law will regulate cryptocurrencies as an asset in India -- and ban its prospect of usage as a currency. 

Reports state that Gopinath, in conversation with CNBC-TV18, also said that cryptocurrencies are not a global threat -- “at least as of now.” Cryptocurrency risks are among the key factors of concern for many, with Indian Prime Minister Narendra Modi chairing a meeting in November 2021 highlighting the very same factors.