Outright ban on cryptocurrencies would be difficult, says IMF chief economist

Cryptocurrency is not a global threat as of now and an outright ban on the asset class would be difficult to execute, Gita Gopinath, the chief economist of International Monetary Fund (IMF) said in an interview with CNBCTV18 on Thursday (December 16, 2021).

“We (IMF) think it is really not appropriate to make any of these cryptocurrencies legal tender that would be a simple no-no,” Gopinath said. In an exclusive interview with CNBC-TV18, she said global standards for regulations for cryptocurrency were required.

“If you are going to go into payment systems, you have to make sure you regulate them well … we should just make sure this problem doesn’t get ahead of the regulatory environment that needs to be put in place,” she added.

Gopinath said there is a need for urgent global standards on how to deal with cryptocurrency and that an outright ban will be difficult to execute. “Different countries are approaching the problem depending upon the tools they have. Our general view is an outright ban can be difficult to implement,” she said.

Most cryptocurrency exchanges, she said, are offshore so a “single country placing a ban on these kinds of activities may not be that effective.”

Gopinath’s comments come as India is set to ban private cryptocurrencies in the Winter session of Parliament. The cryptocurrency bill, which was listed in the government’s legislative business of the Winter session, seeks to prohibit all private cryptos and create a framework for the creation of the digital rupee. Though news agency PTI reported Wednesday that government is unlikely to bring the crypto bill in the ongoing session.

Earlier on Wednesday, addressing an event organised by the National Council of Applied Economic Research (NCAER) on Wednesday, she said, “There are challenges to banning it whether you can end up with truly banning crypto because many exchanges are offshore and they are not subject to regulations of a particular country.”