“When it comes to adopting crypto assets as national currencies, risks and costs outweigh potential benefits,” the International Monetary Fund (IMF) wrote in a post recently. Terming crypto assets as an “inadvisable shortcut”, the post added that the risks come in the form of “macro-financial stability, financial integrity, consumer protection, and the environment”. The financial institution, however, advised that countries should not ignore the advantages of blockchain technology, and instead “leverage new digital forms of money while preserving stability, efficiency, equality, and environmental sustainability”. Cryptocurrencies and the blockchain technology powering them have witnessed an accelerated rate of adoption in the last few years. The excitement around cryptocurrencies stems from the fact that they hold the potential to streamline payments, promote financial inclusion, and improve cross-border transfers as per IMF. On the other hand, it must be noted that the ecosystem is in its infancy and is speculated to be volatile. There is also uncertainty on how to regulate these forms of digital currencies. Read: A complete low-down on cryptocurrency regulation in India Key takeaways from IMF’s blog Crypto assets as legal tender Many countries were considering granting “cryptoassets legal tender status, and make them a second national currency”. Countries may pass laws to encourage the use of cryptoassets as national currency and a mandatory means of payment for everyday purchases. The move has to be backed by creditors in payment of monetary obligations, including taxes, which is akin to notes and coins issued by a central bank. Legal tender status might…
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