IMF lays out crypto action plan

IMF lays out crypto action plan

Recently the International Monetary Fund (IMF) has launched a 9-point crypto asset action plan.

  • The IMF Action Plan provides guidance on taking appropriate policy measures for crypto assets. At the same time, it also implements the principles outlined in the Bali Fintech Agenda.
  • This agenda was launched by the IMF and the World Bank in The agenda aims to capitalize on the opportunities of rapid advances in financial technology.
  • Cryptocurrency is a type of digital currency. It uses cryptography techniques for security and measures against counterfeiting. Bitcoin and Ethereum are some examples of cryptocurrencies.
  • Each cryptocurrency is controlled through a distributed ledger technology called blockchain.

Concerns related to crypto assets-

  • Recently, several exchanges operating within the cryptosystem have failed. At the same time, investors have suffered huge losses due to the sharp decline in some crypto assets.
  • The absence of regulation increases the risks to macroeconomic and financial stability.
  • Unregulated crypto market promotes money laundering and terrorism financing.

Status of cryptocurrency in India-

  • Currently, Cryptocurrency are not regulated in India.
  • In the year 2020, the Supreme Court declared a circular issued by the RBI in this regard as unconstitutional.
  • This circular was issued to prevent banks from transacting in Cryptocurrency.
  • In Budget 2022-23, the government proposed a 30 percent tax on transactions of virtual assets, including non-fungible tokens (NFIs) and Cryptocurrency.
  • The government has also proposed the Cryptocurrency and Official Digital Currencies Bill,
  • It proposes to create a framework for issuing official digital currency and ban all private cryptocurrencies in India.

IMF’s 9 point action plan

  • The crypto asset should not be given the status of official currency or legal tender.
  • Maintaining the effectiveness of capital flow management measures.
  • A clear procedure for taxing crypto assets should be adopted.
  • Clear legal status of crypto assets.
  • Monitoring requirements to be applied to all participants of the crypto market.
  • Create a joint monitoring framework involving different domestic agencies and authorities.
  • International cooperation mechanism should be set up.
  • Monitor the impact of crypto assets on the stability of the international monetary system.
  • Promote global cooperation to develop digital infrastructure for cross-border payments and finance.

International Monetary Fund:

  • The IMF was established in 1945, is governed by and accountable to the 189 countries that are its global members. India has accepted the membership of IMF on December 27,
  • IMF is an international financial institution that works to monitor the global economic condition of its member countries.
  • Along with providing economic and technical assistance to its member countries, it also helps in stabilizing international exchange rates and facilitating economic development.
  • The headquarters of the IMF is in Washington D.C. is in the United States. The special currency of the IMF is called SDR (Special Drawing Rights).
  • The objective of the IMF is to ensure economic stability, promote economic growth, reduce poverty, create new employment opportunities as well as facilitate international trade.

Source – Hindustan Times

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