Emerging countries may benefit from regulating crypto assets rather than imposing a complete ban, according to International Monetary Fund (IMF) chief economist Gita Gopinath.
The 50-year-old leading economist, who will soon take charge as the first deputy managing director of the IMF, also expressed the urgent need for a global policy on cryptocurrency, given the growing demand for the virtual asset around the globe.
Gita Gopinath’s comment came during a lecture on ‘Global Recovery and Policy Challenges in 2022’, organised by the National Council of Applied Economic Research (NCAER).
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“Regulating crypto assets and currencies is essential, especially for emerging and developing economies, as banning them may not work as crypto exchanges are located offshore, which makes it easier for an individual to trade in them despite the ban,” said Gopinath.
She also stressed that no individual country can solve this problem as cryptos involve complex cross-border transactions. “There is a need for a global policy on it urgently,” she added.
Gita Gopinath, however, cautioned that the adoption of crypto assets poses a challenge to emerging and developing economies as most of them have regulations around foreign transactions.
“Cryptos pose problems as usually emerging and developing economies have exchange rate controls, capital controls, and capital flow measures,” Gopinath said.
“Crypto assets and currencies can be used to evade those regulations,” she added.
Gita Gopinath’s comments came at a time when the Indian government is planning to get cabinet approval for its cryptocurrency bill.
The official Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was likely to be introduced during the Winter Session of Parliament, but top government sources indicated that chances are slim.