International Monetary Fund (IMF) chief Christine Lagarde told CNNMoney yesterday, Feb.11, that regulation of cryptocurrencies is “inevitable” and necessary on an international level.
When asked during an interview with CNNMoney emerging markets editor John Defterios, about the increasing popularity of crypto markets possibly being caused by a “starvation for high returns in the global markets,” Lagarde replied that the trend showed a “herd mentality” of those looking for high yield products as well as an element of speculation.
Lagarde added that this trend was also fueled by “dark activity,” a reference to the potential for cryptocurrencies to be used for money laundering and other illegal online activities due to their anonymous nature.
Lagarde herself was convicted of criminal charges in Dec. 2016 for facilitating an illicit transfer of $400 mln between Nicolas Sarkozy and Bernard Tapie, although she has denied any wrongdoing.
As regards regulation of crypto, Lagarde spoke of its inevitability and the need to focus on regulating “activities” over “entities”:
“It’s clearly a domain where we need international regulation and proper supervision.”
As early as October 2016, Lagard told the Wall Street Journal that she sees banks adopting digital currencies in the next five years, while adding that regulation will be needed to prevent money laundering and fraudulent activities.
And in October of last year, Lagarde had expressed interest in the IMF possibly releasing its own cryptocurrency after her previous comments about the potential benefits for countries with weak national currencies to launch their own digital currency.
As the crypto markets have seen a relatively volatile start to the new year, banks and financial institutions have become more serious about regulating cryptocurrencies.
Several large banks worldwide banned credit card purchases of crypto. On the other hand, the joint Commodities and Future Trading Commission (CFTC) and the US Securities Exchange Commission (SEC) hearing on Feb. 6 gave off the impression that future regulation must nurture the crypto sector instead of smothering it.