WASHINGTON—The International Monetary Fund (IMF), an organization of the United Nations that seeks to foster global monetary cooperation and financial stability, has called for global coordination on cryptocurrencies, warning of the risks of surging cryptocurrency prices.
IMF spokesman Gerry Rice said late last week there is a need for "greater international discussion and cooperation among regulators. . . . When asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy. It's important for people to be aware of the risks and take the necessary risk-management measures," CoinDesk reported.
Rice also stressed that cryptocurrencies pose dangers beyond investors' losses, and can potentially be used for money laundering, terrorist financing, tax evasion and fraud.
Previously, the IMF has advocated a balanced approach on cryptocurrency regulation. Christine Lagarde, managing director of the organization, said in September of 2017 that cryptocurrencies may give traditional government-issued currencies a "run for their money" and it is "not wise" to ignore them, CoinDesk reported.
She added that cryptocurrencies would bring "massive disruptions" and warned that central banks and financial services need to pay closer attention to the technology, CoinDesk noted.
CoinDesk pointed out that the latest statements from the IMF come after U.S. Treasury Secretary Steven Mnuchin said that the Financial Stability Oversight Council has formed a working group to carry out discussion with other U.S. regulators. The group is "very focused" on cryptocurrencies, he said at the time.
"We want to make sure that bad people cannot use these currencies to do bad things," Mnuchin added.
Meanwhile, France and Germany will make joint proposals to regulate the Bitcoin cryptocurrency at the next summit of the G20 group of major economies in Argentina in March, French Finance Minister Bruno Le Maire said.
“We will have a joint Franco-German analysis of the risks linked to Bitcoin, regulation proposals and these will be submitted as a joint proposal to our G20 counterparts at the G20 summit in Argentina in March,” stated Le Maire, according to ejInsight.
The world’s biggest and best-known cryptocurrency has fallen to half its record peak of almost $20,000 in recent days on fears that regulators could seek to curb speculation.
“We have a responsibility towards our citizens to explain and reduce the risks,” Le Maire’s German counterpart Peter Altmaier said at the joint news conference in Paris.
Bitcoin soared more than 1,700% last year, hitting a record high just shy of $20,000 as institutional and retail investors snapped up the virtual currency on expectations of further steep increases. “Its astronomical gains, though, have attracted the attention of global regulators tasked with protecting investors from fraud,” ejInsight noted.
In recent weeks, Japan and China have addressed possible regulatory crackdowns on virtual currencies while South Korean policymakers said they are considering shutting down domestic virtual currency exchanges, ejInsight said.