The International Monetary Fund recently published a report on Thursday titled “Global Crypto regulation Should Be Comprehensive, Consistent, and Coordinated,” revealing potential threats against world currencies, such as naira, from crypto assets.
The organization sees the rapid growth of crypto-assets and their associated products and services in recent years as the financial system is increasingly interconnected. However, many activities in this sector are unregulated.
The organization recorded a total of $105.6 billion worth of crypto assets were traded between July 2020 and June 2021, representing a 1,200% increase in value. In terms of transaction volume across all regions, Africa leads peer-to-peer (P2P) payment platforms.
As this number continues to rise, policymakers remain struggling to monitor risks due to the nature of the crypto assets transaction being cross-sector and cross-border limits the efficiency of national strategies. The IMF warns that such imbalance will soon exacerbate systemic financial instability in some countries.
“These risks underscore why we need comprehensive international standards that address the risks that crypto-assets, their associated ecosystems, and their related transactions pose to the financial system while enabling the development of useful crypto assets and applications,” the report said.
The report, which said that crypto-assets have the potential to profoundly change international monetary and financial systems, recommends licensing or authorizing crypto-asset service providers that provide critical functions.
“In an environment of stretched valuations, the nearly $2.55 trillion market capitalization might reflect froth in addition to the value of the underlying technological innovations such as blockchain,” said IMF.