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
