IMF calls for greater oversight on crypto, proposes new risk assessment matrix

The crypto industry is becoming an increasingly integral part of the global financial system, presenting new challenges and risks to stability in the broader economy, the IMF said

article-image

PLCNSK/Shutterstock modified by Blockworks

share

The International Monetary Fund (IMF) released a working paper last week seeking to tackle the rapidly changing crypto market and highlight significant macro-financial risks they believe have yet to be fully addressed.

The “Assessing Macrofinancial Risks from Crypto Assets” paper points out the crypto industry is becoming an increasingly integral part of the global financial system, essentially operating as a parallel, unregulated financial system. 

This brings about considerable systemic risks that the traditional financial sector cannot afford to overlook, the IMF said in its paper released on Friday.

In a bid to meet that challenge, the IMF is proposing a new tool — the Crypto Risk Assessment Matrix (C-RAM) — aimed at monitoring and assessing those perceived emerging risks both nationally and globally.

One of the most pressing challenges identified is the absence of centralized data and regulatory oversight, which calls for immediate international cooperation. 

The IMF also urges that given the fast-paced innovation and the decentralized nature of the crypto market, existing policy frameworks are inadequate for effective risk management.

A need to expand current macroprudential policies to include crypto and decentralized finance considerations is required to shore up concerns surrounding their risk profile, the IMF said. 

Read more: G20 nations endorse IMF and FSB guidelines for crypto regulation

It also suggests that this expansion should be in concert with other macroeconomic policies to build a comprehensive risk management strategy.

Based in Washington DC and consisting of 190 member countries, the IMF positions itself as an entity promoting global economic stability and growth. It achieves this through financial support, policy guidance, surveillance, technical aid, research and capacity building. It often serves as a forum for international financial cooperation.

Its paper last week also took aim at countries that have mandated bitcoin as legal tender to co-exist alongside their national currencies, including El Salvador and the Central African Republic.

“These legal changes could quickly increase the adoption and exposures of highly volatile crypto assets, amplifying the many above mentioned risks,” it said.

El Salvador adopted bitcoin (BTC) as legal tender in November 2021, becoming the first nation to do so. Four months later the IMF urged the Latin American country to ditch those efforts, citing systemic financial risks it poses to the wider community.

The IMF plans to update its conceptual framework as more data and country-specific analyses become available. It will aim for a coordinated international effort to curtail the potential “macro-financial risks” from the crypto sector, it said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

small cap eth beta trade.png

Research

With a strong correlation to ETH, METIS appears to be a favorable ETH beta play at a time when L2s should see increasing market share relative to Ethereum.

article-image

Bitwise took the initial steps for an XRP ETF Wednesday

article-image

Plus, enrollment for the Donald Trump-backed crypto project is underway

article-image

On Solana so far, there are two main competitors: Jito and Solayer

article-image

Plus, Sui-eet liquidity surge and USDC’s new home on Base

article-image

The Web3 community is stacking bricks when it should be building bridges