IMF and FSB compile a synthesis paper for crypto assets

Specifically, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) have jointly issued recommendations for addressing macroeconomic and financial stability risks linked to crypto-assets. Crypto assets, which have been around for over a decade, are known for their substantial price fluctuations, but they have also witnessed increased complexity in their operations over the years. 

Although direct links between crypto-assets and systemically important financial institutions, core financial markets, and market infrastructures remain limited, the IMF believes that they have the potential to become a source of systemic risk in specific jurisdictions if they gain prominence in payment systems or retail investments. In this context, the IMF has outlined essential elements for an appropriate policy response, encompassing macroeconomic, legal, and financial integrity considerations, along with implications for monetary and fiscal policies. 

Concurrently, the FSB and standard-setting bodies (SSBs) have released regulatory and supervisory recommendations and standards to address risks to financial stability, financial integrity, market integrity, investor protection, prudential standards, and other risks associated with crypto assets. 

In response to a request from the Indian G20 Presidency, the IMF and FSB have collaborated on a document to synthesise their policy recommendations and standards, alongside those of SSBs. These collective recommendations provide comprehensive guidance for authorities to manage macroeconomic and financial stability risks associated with crypto-asset activities and markets, including those tied to stablecoins and decentralised finance (DeFi) platforms. 

The paper explains how the policy and regulatory frameworks developed by the IMF and FSB (alongside SSBs) align and interact with each other. Importantly, it does not introduce new policies, recommendations, or expectations for member authorities.

The main risks outlined in the document 

The document identifies key risks to macroeconomic stability, financial stability, and other areas such as legal, financial integrity, and market integrity-related risks arising from crypto-asset activities. It subsequently presents policy responses in three key areas, namely macro-financial policies, regulation for financial stability, and other policy and regulatory measures. 

The document concludes with an implementation plan, which outlines ongoing and planned initiatives aimed at implementing crypto-asset policy frameworks. These initiatives collectively seek to enhance institutional capabilities beyond G20 jurisdictions, foster global coordination, cooperation, and information sharing, and address data gaps necessary for a comprehensive understanding of the rapidly evolving crypto-asset ecosystem.