IMF chief Lagarde on the "dark side" of Crypto: Blockchain is "exciting" but needs regulation

International Monetary Fund (IMF) head Christine Lagarde said that crypto markets should be governed by the same laws to traditional markets in an IMF blog post published today, March 13.

The post, "Tackling the dark side of the Crypto world," begins by praising the virtues of Blockchain technology, to which it refers as However, Lagarde adds that regulators must "understand the peril that accompanies the promise ".

In terms of specific ways to enact regulations that will protect consumers from crypto markets, Lagade writes that "we must fight fire with fire." It presents two examples: the use of digital ledger technology (DLT) to "create standard, verified, customer information registries with" digital signatures "and the use of biometrics , artificial intelligence and cryptography to find suspicious transactions more quickly.

Since cryptocurrencies are decentralized, anonymous and do not need a central bank , in money laundering and terrorist financing.It mentions the example of the darknet market Alphabay, which had more than a billion dollars exchanged by crypto on its platform before its closure in July 2017.

Lagarde writes that cryptocurrencies could threaten the stability of traditional financial markets and that regulations need to be developed globally with the help of the IMF:

"No p ays can not handle this problem alone […] Since crypto assets do not know borders, the framework to regulate them must be global "

The goal of Lagarde is to give cryptographic consumers the same protection that they have in traditional markets, and references several agencies that she considers to be good examples of regulatory due diligence; the Financial Stability Board (FSB), which observes the fintech innovation, and the Financial Action Group (FATF), which fights against money laundering and the financing of terrorism. The FATF is currently preparing a report on ways to prevent the use of crypto in money laundering for the next G20 summit.

She also mentions the Securities and Exchange Commission of the United States and other regulators Lagarde's initial hypothesis is that crypto is "somewhere in between" a fad and a revolution, and that only global cooperation, with the IMF, can "exploit the potential of crypto-assets" (1945-1990). while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.

Lagarde has already stated that she believed that crypto regulation is both inevitable and necessary, but she also spoke positively about the potential role of cryptocurrencies in countries with weak currencies.