The International Monetary Fund said that banning cryptocurrency assets is a consideration. It is not ideal, though this drastic step may happen.
The IMF is worried that the increasing adoption of crypto could undermine the effectiveness of the monetary policy. After over a decade of printing money, the IMF is understating the value of cryptocurrency in keeping central banks in check.
People need alternative capital flow management options. It cannot rely on physical money to retain its value. For example, the wild swings in the U.S. dollar pushed inflation higher in emerging markets. Still, the USD weakness recently led to an increase in the value of gold and other metals. Oil prices also rose.
Bitcoin and Ethereum gained in value when the US dollar weakened. The dynamics among commodities, the US dollar, and cryptocurrency encourage checks and balances on monetary policy.
Crypto Ban Not a Good Idea
A crypto ban would increase the control of the world’s money supply to fewer decision-makers. Instead of fearing its importance, the IMF should encourage useful regulations that protect crypto investors.
The crypto community has plenty of work ahead to legitimize the currency. It needs to crack down on illegal activities. After many platforms filed for bankruptcy, crypto exchanges need better self-regulation that protects their depositors.
