The International Monetary Fund, or IMF, has pointed to the collapse of FTX as well as “turmoil” in the banking sector in its calls for regulation of digital assets.

In its Global Financial Stability Report released on April 11, the IMF renewed calls for “comprehensive and consistent regulation and adequate supervision” following the failures of cryptocurrency firms including FTX as well as the subsequent collapse of crypto-friendly banks, including Silicon Valley Bank and Signature Bank. According to the financial agency, regulation for entities in the crypto asset ecosystem — with “strict prudential requirements” for stablecoin issuers — should include the storage, transfer, exchange, and custody of reserves for digital assets.

The report cited a “rough year for crypto” in 2022, pointing to the collapse of the FTX exchange — not the failures of Terraform Labs, Celsius Network, or others which preceded the firm’s bankruptcy filing — as an event which “created significant contagion” in the ecosystem. However, the IMF reported that the impact outside of the crypto space due to these collapses was largely “limited.”

Criticism of cryptocurrencies and digital assets is nothing new for the IMF. In February, the agency’s executive board endorsed a policy framework that did not include recognizing crypto as legal tender. However, members have reportedly leaned towards regulating digital assets rather than outright banning them.

(by Turner Wright)