IMF’s Gopinath advocates regulating cryptos, says ‘banning may not work’

The chief economist of the International Monetary Fund (IMF), Gita Gopinath, has advocated regulating crypto assets rather than banning them outright.

The economist, who will soon take charge as the first deputy managing director of the IMF, also expressed the need for a global policy on cryptocurrency, given the growing demand for the virtual asset around the world.

Gopinath made the comment during a lecture on ‘Global Recovery and Policy Challenges in 2022’, organised by the National Council of Applied Economic Research.

“Regulating crypto assets and currencies is essential, especially for emerging and developing economies, as banning them may not work as crypto exchanges are located offshore, which makes it easier for an individual to trade in them despite the ban,” she said.

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Gopinath also stressed that no individual country can solve this problem as cryptos involve complex cross-border transactions. “There is a need for a global policy on it urgently,” she added.

“Cryptos pose problems as usually emerging and developing economies have exchange rate controls, capital controls, and capital flow measures.

“Crypto assets and currencies can be used to evade those regulations,” she said.

Gopinath’s comments come at a time when India is planning to get cabinet approval for its cryptocurrency bill.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was expected to be introduced during the Winter Session of Parliament, but government sources later said it would be deferred.