Gita Gopinath, Chief Economist at the International Monetary Fund, recently stated that crypto should not be banned in developing countries. Global regulation of the industry was instead her “need of the hour”.
The Global Challenge of Crypto
At a National Council of Applied Economic Research event (NCAER), Gopinath spoke out about the regulatory issues surrounding crypto. She stated that a global policy regarding crypto is necessary to address the emerging market challenges.
She also said that banning them is impossible given the global presence of exchanges.
She stated that regulation of crypto assets and currencies was essential, particularly for emerging and developing countries. “Banning them may not work because crypto exchanges are offshore, which makes trading in them easier despite the ban,” she said.
China declared a ban on crypto exchanges in September. After that, exchanges like Bitmart or Biki fled China. India is currently deliberating on a similar ban.
Gopinath stressed the importance of a “global” policy on crypto because cross-border transactions render any nation’s regulations against them quite weak. They can be used to evade capital controls and exchange rate controls as well as capital flow measures, she stated.
Michael Saylor, CEO of MIcroStrategy (the world’s largest Bitcoin owner), has highlighted the benefits of this property from a business standpoint. Bitcoin, unlike real estate can be transferred across borders “at the speed of light” to tax-friendly jurisdictions.
Christine Lagarde, President of the European Central Bank, has also advocated for global cryptocurrency regulation to counter its “money laundering” decentralized capabilities.
Regulating over Banning
Other than China and India, most jurisdictions have decided to regulate cryptocurrency rather than ban it. Many US officials view China’s ban on cryptocurrency as an opportunity to welcome it and capitalize on its innovations. Ted Cruz, Hester Perce, and Pat Toomey are just a few of these.
Singapore also chose not to ban. Ravi Menon, director of MAS, believes that crypto could have a “very good outcome for society and the economy” and would prefer to create a regulatory framework to allow it to function within.
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