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The International Monetary Fund Imf Warns Against Using Crypto Assets Like Bitcoin As Legal Tender Bitcoin News

IMF Warns Against Using Crypto Assets as Legal Tender The International Monetary Fund (IMF) has issued a warning against using cryptocurrencies such as bitcoin as legal money.
The IMF does not envision crypto assets becoming a national currency due to the various risks and costs involved.
The International Monetary Fund (IMF) has issued a warning about the risks of adopting cryptocurrencies as a national currency. On Monday, the IMF released a blog post on the topic of cryptocurrencies as legal money.
Tobias Adrian, financial counselor and head of the IMF’s Monetary and Capital Markets Department, and Rhoda Weeks-Brown, general counsel and director of the IMF’s Legal Department, wrote a piece titled “Cryptoassets as National Currency? A Step Too Far.”
El Salvador, a Central American country that just joined the United States in adopting bitcoin as legal cash, is not mentioned in the article.
Cryptoassets, including bitcoin, pose significant dangers to macro-financial stability, financial integrity, consumer protection, and the environment, according to the authors.
Despite the benefits of crypto’s underlying technologies, the IMF directors maintained that governments “must step up to provide these services.”
Trying to make cryptoassets a national currency is an unwise shortcut,” the directors say. They predict that crypto assets will not catch on because people in countries with stable economies will have “very little motivation to price or save” in crypto assets, whereas countries with less stable economies will prefer to adopt a “globally recognized reserve currency such as the dollar or euro.”
Furthermore, in certain countries, laws prohibit or restrict the use of other forms of payment.
These factors could tip the scales in favor of cryptoasset adoption.
Not only would “households and companies spend significant time and resources deciding which money to retain as opposed to participating in productive activities,” but government revenues would also “be exposed to exchange rate risk,” the authors said, adding that “monetary policy would lose bite.”
Interest rates on foreign currency cannot be set by central banks.
They cautioned that domestic prices could become extremely volatile, and that financial stability could be jeopardized.
“Cryptoassets can be used to launder ill-gotten gains, fund terrorists, and escape taxes,” they added.
This might jeopardize a country’s financial system, fiscal balance, and connections with foreign governments and correspondent banks.” Use of cryptocurrencies as legal tender also raises legal concerns.
“To qualify as a legal tender, a payment method must be widely available.”
Yet, many nations lack internet access and the technology required to transfer cryptoassets, raising concerns about justice and financial inclusion,” they noted.
Furthermore, “Changes to a country’s legal tender status and monetary unit often need complicated and extensive revisions to monetary law to avoid establishing a disconnected legal system,” according to the IMF directors. Banks and other financial institutions might also be vulnerable to significant price volatility in cryptoassets, since mining cryptocurrencies like bitcoin demands “an enormous amount of computing power.”
Large swings in value, fraud, or cyber-attacks might cause households and organizations to lose money.
What are your thoughts on the IMF directors’ remarks?
Please share your thoughts in the comments box below.
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