International Monetary Fund (IMF) Managing Director Kristalina Georgieva just spoke about the future of crypto and blockchain during a speech in Seoul, South Korea.
In her speech titled “Leaving the Wild West: Taming Cryptocurrencies and Unleashing Blockchain,” Georgieva talks about cryptocurrencies and the importance of regulation.
With clear rules and a minimal but solid infrastructure, 🇰🇷Korea’s Hangul is one of the best writing systems in the world. Rules for crypto assets and infrastructure for blockchain innovation must also be sensible and far-sighted to avoid risks and seize opportunities. pic.twitter.com/fE2R978wkZ
— Kristalina Georgieva (@KGeorgieva) December 14, 2023
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Government and Regulation
The “Wild West” of crypto
The early years of cryptocurrency are often compared to the “Wild West,” including Georgieva. In their opinion, the early days of cryptocurrencies are characterized by a lack of regulation, high volatility and market crashes.
She reports that many investors have suffered as a result. She specifically names the founders of Binance and FTX, both of whom were found guilty of financial crimes.
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Crypto as Bitcoin part of the financial future
But Georgieva also sees a future in which crypto could play a prominent role. She emphasizes that cryptocurrencies like Bitcoin (BTC) will not disappear.
“Bitcoin is now trading at its highest level since April 2022. Crypto market capitalization has doubled in the past year. And people are still about 20 times more likely to search for the word “bitcoin” than “health and wellness” and seven times more likely than “climate change,” Georgieva said.
This is a much more positive attitude towards the emerging sector than we have seen from the IMF so far.
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Clear regulations on cryptocurrencies are needed, according to IMF director
However, Georgieva warns about the risks of “cryptoization,” where cryptocurrencies replace local currencies. In their opinion, this would lead to problems with monetary policy and financial stability.
She therefore emphasizes the importance of clear rules. She points to a report from the IMF and the Financial Stability Board that provides guidance on regulating cryptocurrencies. These include the non-recognition of cryptocurrencies as legal tender, the application of uniform laws and regulations, and the global coordination of policies. Countries like South Korea are already taking steps to implement these policies, says Georgieva.
The IMF director also spoke about the potential of blockchain technology. She talks about how banks can use blockchain to improve trading infrastructure, reduce costs and increase financial accessibility.
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