"Crypto may displace Naira and other developing market currencies \u2013 IMF"

" \n Crypto may displace Naira and other developing market currencies \u2013 IMF \n \n\n \n Cryptoassets pose immediate and serious risks to some emerging markets and developing economies\u2019 currencies such as the naira (Nigeria\u2019s local currency), according to the International Monetary Fund. \n \n\n \n The IMF made this assertion in a report released on Thursday titled Global Crypto regulation Should Be Comprehensive, Consistent, and Coordinated. The IMF stated in its report that it is mandated to maintain the stability of the global financial and monetary system. \n \n\n \n Crypto assets present more immediate and acute risks of currency substitution in some emerging markets and developing economies Like Nigeria, according to the Washington DC-based fund. \n \n\n \n Managing capital flow after \u201ccryptoisation\u201d will require fine-tuning. This is because regulating capital flows using established regulatory tools can be very challenging, especially when value is transferred using new instruments, new channels, and new service providers that are not regulated.\u201d \n \n\n \n Recall, a total of $105.6 billion worth of crypto assets were traded between July 2020 and June 2021, representing a 1,200% increase in value. In terms of transaction volume across all regions, Africa leads peer-to-peer (P2P) payment platforms . Africa has topped peer-to-peer (P2P) payment platforms in terms of transaction volume across all regions. \n \n\n \n Read: Container traffic at Tema Port increase by 45.6% in half year \n \n\n \n \n \n\n \n Considering that most banks in Africa are hostile to cryptocurrency exchanges , Africa is left with P2P platforms as its only option and has relatively shown growth over the time period in review. \n \n\n \n As policymakers struggle to monitor risks, crypto assets will soon pose systemic financial instability in some countries, according to the IMF. A crypto asset was changing drastically the entire financial system the organization aimed to protect, it added. \n \n\n \n Crypto assets and their associated products and services have experienced rapid growth in recent years, according to the IMF. In addition, the financial system is increasingly interconnected. IMF disclosed that many activities in this sector are unregulated and that policymakers face difficulty monitoring their risks. It believes that some of these financial stability risks may soon become systemic in some countries. \n \n\n \n \u201cIn an environment of stretched valuations, the nearly $2.55 trillion market capitalization might reflect froth in addition to the value of the underlying technological innovations such as blockchain,\u201d the report added. \n \n\n \n \n \n\n \n It is difficult for regulators and firms to identify, monitor, and manage crypto-related risks, the international fund says. According to the IMF, \u201c These risks underscore why we need comprehensive international standards that address the risks that crypto-assets, their associated ecosystems, and their related transactions pose to the financial system while enabling the development of useful crypto assets and applications.\u201d \n \n\n \n Crypto\u2019s cross-sector and cross-border remit limits the efficiency of national strategies, according to the IMF. In a statement, the body said, \u201cCountries employ very different strategies, and existing laws and regulations may not be able to cover all aspects of these assets at the national level.\u201d \n \n\n \n In addition, many crypto service providers operate beyond national boundaries, posing a challenge to supervision and enforcement. Destabilizing capital flows could result from uncoordinated regulatory action. Global regulatory frameworks offering level playing fields along the activity and risk spectrum are needed, according to the IMF. \n \n\n \n There was a recommendation to license or authorize crypto-asset service providers that provide critical functions. It is important to clearly articulate licensing and authorization criteria, identify the authorities responsible for them and set up mechanisms for coordinating their activities. Crypto assets and stablecoins should have requirements tailored to their main use cases. \n \n\n \n There is a pressing need for cross-border collaboration and cooperation to deal with technological, legal, regulatory, and supervisory challenges, according to the IMF. \n \n\n \n The report said that crypto-assets have the potential to change international monetary and financial systems profoundly. \n "

"Crypto may displace Naira and other developing market currencies \u2013 IMF"

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