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IMF’s Lagarde Counters Crypto Warnings With New Praise Of ‘Potential Benefits’

The head of the International Monetary Fund (IMF) Christine Lagarde was buoyant about cryptocurrency in a blog post in support of the technology, published Monday, April 16.

The post, which comes roughly one month after Lagarde cautioned against the “dark side” of cryptocurrency, sees the IMF leader focus on what she describes as the “potential benefits” of “crypto-assets such as Bitcoin.”

“A judicious look at crypto-assets should lead us to neither crypto-condemnation nor crypto-euphoria,” she writes.

While continuing her narrative about the need to reign in illicit activity involving crypto, which she had voiced during January’s World Economic Forum 2018 and since, Lagarde nonetheless reiterates the need for an “even-handed approach” going forward:

“Understanding the risks that crypto-assets may pose to financial stability is vital if we are to distinguish between real threats and needless fears. That is why we need an even-handed regulatory agenda, one that protects against risks without discouraging innovation.”

She continued, “A clear-eyed approach can help us harness the gains and avoid the pitfalls of the new crypto-assets landscape.”

Lagarde’s call for a balanced outlook on cryptocurrency comes at a time of increasing regulatory involvement in the industry, while traditional financiers continue to call Bitcoin a ‘bubble’ and pundits spy the start of a market surge.

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IMF's Lagarde: Track Cryptos with Blockchain to 'Fight Fire with Fire'

The head of the International Monetary Fund (IMF), Christine Lagarde, has said regulators should use blockchain technology to curb the “peril that comes along with the promise” of cryptocurrencies.

“The same innovations that power crypto-assets can also help us regulate them. To put it another way, we can fight fire with fire,” Lagarde wrote in an IMF blog post on Tuesday.

Lagarde warned that cryptocurrencies could create financial instability, as well as facilitate terrorism and money laundering, arguing that distributed ledger technology and cryptography could be used in internationally coordinated regulatory efforts.

Distributed ledger technology, she claimed, “can be used to speed up information-sharing between market participants and regulators.”

Lagarde wrote:

“Those who have a shared interest in maintaining safe online transactions need to be able to communicate seamlessly. The technology that enables instant global transactions could be used to create registries of standard, verified, customer information along with digital signatures. Better use of data by governments can also help free up resources for priority needs and reduce tax evasion, including evasion related to cross-border transactions.”

In the post, Lagarde also said that cryptography, in addition to AI and biometrics, could be used to “remove the “pollution” from the crypto-assets ecosystem.”

According to Lagarde, these technologies, “can enhance digital security and identify suspicious transactions in close to real time. This would give law enforcement a leg up in acting fast to stop illegal transactions.”

The IMF managing director went on to suggest that regulators should look toward the frameworks of the Financial Action Task Force (FATF) and the Financial Stability Board to inform their own rules.

The views expressed in the blog post largely align with Lagarde’s previous comments on cryptocurrencies, though the literal fiery rhetoric could indicate that the IMF is seriously entertaining intervening in the crypto industry sooner rather than later.

Christine Lagarde image via Shutterstock

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IMF Chief Christine Lagarde Says International Crypto Regulation Is ‘Inevitable’ And Necessary

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.

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IMF Chief Lagarde: Global Cryptocurrency Regulation Is 'Inevitable'

Christine Lagarde, head of the International Monetary Fund, has stated that international regulatory action on cryptocurrencies is “inevitable.”

Lagarde, who is the managing director of the international organization that aims to foster global financial stability, said that the IMF’s concerns over cryptocurrencies stem largely from their potential use in illicit financial activities.

In an interview with CNNMoney on Feb. 11, she said:

“We are actively engaging in anti-money laundering and countering the financing of terrorism. And that reinforces our determination to work on those two directions.”

Lagarde further explained that the regulatory direction should be activity-based, focusing on “who is doing what, and whether they’re properly licensed and supervised.”

While the new comments are largely in line with Lagarde’s already public views on cryptocurrency, it indicates the IMF may be moving to be more actively involved in preventing the illicit use of cryptocurrency.

On multiple occasions, Lagarde has previously cautioned that cryptocurrencies should be taken seriously and called for global cooperation among worldwide regulators. And she is not alone in voicing concerns over use of cryptocurrency in cross-border financial crimes.

According to an earlier report by CoinDesk, during the Davos World Economic Forum in late January, several worldwide leaders shared the same sentiment, including the U.K. Prime Minister Theresa May, French President Emmanuel Macron and the secretary of the U.S. Treasury Department Steven Mnuchin.

And, just last week, senior officials from France and Germany called for the G20 group of nations to discuss cooperative action on cryptocurrencies ahead of a summit next month.

Christine Lagarde image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Regulated, Government Issued Cryptos to Challenge Bitcoin in 2018

Calls for cryptocurrency regulation were a resounding theme at the World Economic Forum in Davos last week.The world’s most prominent financial institutions remain wary of going all in on cryptocurrencies, amid fears of future regulation leading the market to tank.

Governments around the world have signaled their ongoing or imminent intent to legislate and regulate cryptocurrencies around the world, and it seems the largest banking and financial firms are waiting for more clarity before they forge ahead with plans to enter the market.

Countries like Russia are forging ahead with the creation of their own, government-issued cryptocurrency, which they can fully control. Others, like Venezuela, have been forced to do so to battle out-of-control inflation that has crippled its economy. Opposed to a decentralized and anonymous system, the creation of a cryptocurrency that governments can control is their only option to wrestle back some semblance of ‘control’ that has been handed to the everyday man using cryptocurrencies.

Speaking to RT at the WEF in Davos, Universa CEO Alexander Borodich said governments are keen to issue their own virtual currencies that would be backed by commodities like oil.

“From my perspective, they will offer state country-wide cryptocurrencies like Cryptorruble or crypto-barrel if they like to… back the oil they have or other natural resources.”

He added that 2018 would see the emergence of these state-issued cryptocurrencies to challenge the dominance of Bitcoin and other popular virtual currencies.

Nefarious uses still a concern

Despite the best intentions of honest developers, exchanges and Blockchain engineers, there is a prevailing sentiment that the underworld still uses cryptocurrencies. It’s been a number of years since the closure of Silk Road and subsequent black markets, but heads of states are still citing concerns over the nefarious uses of virtual currencies.

As quoted by the Independent, US treasury secretary Steve Mnuchin said there is a concerted effort being made to prevent cryptocurrencies being used for illicit trade.

“My number-one focus on cryptocurrencies, whether that be digital currencies or Bitcoin or other things, is that we want to make sure that they’re not used for illicit activities.”

A major concern is also the well-being of financial markets and systems that have been shaken up by the massive adoption of Bitcoin and altcoins in the past 12 months. In the words of Mnuchin:

“We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe. We want to make sure that the rest of the world — and many of the (Group of) 20 countries are already starting on this — have the same regulations.”

IMF head Christine Lagarde also painted a harsh perception of cryptocurrencies.

“The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements.”

Nevertheless, the cryptocurrency community has been bullish on social media, slamming the apathy swirling around at Davos this week.

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May, Lagarde, Mnuchin: World Leaders Are Talking Crypto at Davos

World leaders have struck a cautionary tone on cryptocurrencies in statements made during the World Economic Forum (WEF) event in Davos, Switzerland.

From the Prime Minister of the U.K. to the Treasury Secretary of the U.S., the event has seen a number of notable figures make remarks on both cryptocurrencies like bitcoin as well as blockchain technology as a whole. As reported yesterday, notable finance figures including Goldman Sachs CEO Lloyd Blankfein have already weighed in on the topic, suggesting that cryptocurrencies are quietly emerging as a major area of discussion at the gathering of the global elite.

For example, Steven Mnuchin, who leads the U.S. Treasury Department, remarked on one panel that “illicit use” of cryptocurrencies is a major concern for American regulators.

“My number-one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they’re not used for illicit activities,” Mnuchin remarked, according to a report from Reuters.

Similarly, fellow panelist and International Monetary Fund head Christine Lagarde said bitcoin’s anonymity enables the movement of hidden funds.

“The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism, is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements,” Lagarde, a former finance minister of France, was quoted as saying.

Lagarde predicted that national governments are likely to further regulate cryptocurrencies to prevent these use cases. Perhaps proving Largarde’s point, U.K. Prime Minister Theresa May told Bloomberg that cryptocurrencies should be looked at due to how they are used “particularly by criminals.”

Perhaps most significantly, French President Emmanuel Macron called for an international approach to regulating cryptocurrencies, saying “we need to establish a global contract for global investment.”

Weighing the impact

Others at Davos commented specifically on the exact economic impact of cryptocurrencies today, with comments drawn from finance watchdogs from Asia and Europe, among other areas.

China’s securities regulator vice-chairman, Fang Xinghai, said during a panel that it is unclear what impact bitcoin would have on the economy.

Bank of Canada Governor Stephen Poloz echoed those remarks, adding that he believes there would be little impact on the economy if the cryptocurrency market were to crash.

He went on to caution against investing in cryptocurrencies, saying:

“When we had the tech wreck, that was a much more widespread exposure. And the fact it barely had [a] perceptible effect on the real economy because it was not a stock market crash but just a segment of the stock market. But it was highly speculative, there was all kinds of bubbles there.”

The British Chancellor of the Exchequer, Philip Hammond, argued in turn that bitcoin has the potential to grow to a point where it would have a more significant impact.

He called for further regulations “before the amount of outstanding bitcoin becomes large enough to be systemically important to in the global economy,” predicting that it would reach that point “soon.”

Bullish on blockchain

Despite their concerns about cryptocurrencies, world leaders and regulators at Davos remarked positively about blockchain as a technology.

Poloz, for example, called it “a true piece of genius,” adding that he expects it to be applied to different aspects of the economy.

“The reason that it has such appeal in the case of bitcoin is it gives you finality of settlement that eventually grinds through the distributed ledger and therefore you trust that,” he remarked, according to CNBC, on the topic of a central bank-issued digital currency. “Whereas the central bank, if the Bank of Canada, were to issue a digital currency, well you already trust the Canadian dollar, and so you don’t need a distributed ledger in order to believe you just received final payment in your digital wallet.”

Lagarde called the technology “fascinating,” noting its censorship-resistant characteristics, among others.

She also suggested that other innovations are likely to emerge from the blockchain space, cautioning that regulators will need to monitor such developments over time, saying during the panel:

“…there will be new things and innovations coming out of this movement, and we just need to keep them under our watch.”

Image Credit: Drop of Light / Shutterstock.com

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FUD for Bitcoin, Praise for Blockchain: Royal Bank of Canada CEO on Crypto

Financial heads continue to weigh in on Bitcoin’s legitimacy, and from Jamie Dimon to the IMF’s Christine Lagarde, the opinions are split. Now, Royal Bank of Canada CEO David McKay has said his piece, questioning its point and function in society.

Hidden money

The Canadian bank boss sees Bitcoin as a way to move money around undetected, following in a long line of traditional investors who see Bitcoin as a dark art of currency.

“The purpose Bitcoin seems to serve today is really to help move money in a hidden way and facilitate, potentially facilitate, criminal activity of moving money in an undetected way,” McKay said.

“I think some people will call it a fraud. I don’t think it’s fraudulent … But it doesn’t solve a main need in society right now.”

Traditional idea of money

Because the CEO obviously works closely with fiat currency, it seems he is having difficulty in fathoming its deeper functions. McKay says he battles to see its legitimacy in comparison to other currencies.

“A currency is a promissory note on a future good and service and economy. I hold a dollar, or a pound or a euro because I want to exchange it for a physical good or a service sometime in the future and I’m confident in holding that note because of the political system backing it, because of the strength of the economy, because of a central bank with reserves.”

“So when you look at those characteristics and the real need for a currency, how do you apply that to a cryptocurrency? Most of those criteria don’t fit; it’s not backed by a government, it’s not backed by the rule of law, it’s not backed by economy, there’s no reserve against it, you actually have to mine it in a distributed chain environment,” said McKay.

Blockchain over Bitcoin…again

There is little doubting that Blockchain technology is here to stay, and there are many traditionalists that are getting excited about that technology while also shunning its offshoot, Bitcoin.

McKay is in this same boat, backing the underpinning technology.

“Most people in the world aren’t talking about Bitcoin. They’re talking about Blockchain, the distributed ledger private or public that underpins the Bitcoin application of it,” said McKay.

“It has a chance to transform everything from our capital markets, and our trading businesses, our security settlement businesses, right into our retail franchise. And so that technology, that ability to work in code and build solutions, are two new technologies and areas that we need.”

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Why IMF Wants to Enter Crypto Market With its Own Coin

Christine Lagarde, IMF Managing Director, has had many positive things to say about the potential of digital currencies and their disruptive model, but she has now added that the IMF would not rule out creating its own version of it.

Recently, Russia entered the decentralized digital currency space with its ‘CryptoRuble’ and it could be that organisations, as well as states, see the value of digital currencies, but ones that they can control and issue.

About to see massive disruptions

The IMF head has said before that she pictures her organisation playing a crucial role in regulating cryptocurrencies globally, but in a positive manner as she seems to be on the side of Bitcoin.

Lagarde is of the opinion that Global financial institutions are taking risks by not watching and understanding emerging financial tech products, and that are already starting to shake up the financial services and global payments system.

“I think that we are about to see massive disruptions,” Lagarde said at the IMF Annual Meeting in Washington D.C.

IMF to develop its own

Remarking on something that the IMF has already created, comparing it to digital currencies, Lagarde said that the IMF would not rule out developing its own cryptocurrency in the future.

She pointed to the IMF’s Special Drawing Right (SDR), a currency the IMF created to serve as an international reserve asset, that could incorporate technology similar to cryptocurrencies.

“What we will be looking into is how this currency, the special drawing right, can actually use the technology to be more efficient and less costly,” she said.

The IMF is looking to make its way into the crypto space, and with their hopes of regulating it, Lagarde says it makes sense simply due to the cross border nature of it.

“My hope is that we can participate in that process because I see that as a very cross-border process,” she added.

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'Massive Disruption': IMF's Lagarde Says Cryptocurrencies Must Be Taken Seriously

Christine Lagarde, managing director of the international monetary fund (IMF), has warned that central banks and financial services need to pay closer attention to cryptocurrencies.

Speaking to CNBC at the IMF’s Annual Meetings in Washington D.C., Lagarde said:

“I think that we are about to see massive disruptions.”

According to Lagarde, cryptocurrencies could play a future role in updating the IMF’s own internal currency, a reserve asset named the Special Drawing Right (SDR).

She said: “What we will be looking into is how this currency, the Special Drawing Right, can actually use the technology to be more efficient and less costly.”

The IMF has been exploring the potential of the technology for some time, taking a focus on both cross-border payments and the possibility of a central bank-backed cryptocurrency.

Further, as the fund’s managing director, Lagarde has been a notable advocate of the technology.

Speaking at London conference last month, she said that cryptocurrencies may give traditional currencies a “run for their money,” while back in June, Lagarde argued that distributed ledger tech (DLT) could be used as a means to combat financial fraud and funding of terrorism.

In her conversation with CNBC today, Lagarde spoke out against JPMorgan Chase head Jamie Dimon’s heavy dismissal of bitcoin as a “fraud” last month, and warned against miscategorizing the cryptocurrency sphere as speculative or fraudulent.

Lagarde advised: “It’s a lot more than that as well.”

Christine Lagarde image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Christine Lagarde Convinced IMF Could Play Pivot Regulating Cryptocurrencies

IMF head Christine Lagarde’s positive comments on cryptocurrency appear to have inspired a U-turn in traditional finance circles.

Lagarde’s suggestion that digital currencies could give fiat-based setups “a run for their money” provided a powerful alternative perspective to bankers’ “fraud” accusations.

Lingham banker buddy’s optimism

Now, well-known crypto industry figures such as Vinny Lingham are producing evidence that optimism from legacy money is still flowing.

Reproducing an exchange with a “banker/finance friend” Monday, Lingham noted the ease with which he had changed his mind on ICOs.

“[…] Now it just seems like easy money,” he added.

IMF new role

For her part, Lagarde’s ‘Brave New World’ speech at the Bank of England Conference late September contained more clues to a future international regulatory stance on cryptocurrency.

“To make things smoother—at least a bit—we need dialogue,” she said about cross-border regulatory efforts on fintech, including digital currency and decentralized technology.

“Between experienced regulators and those regulators that are just beginning to tackle fintech. Between policymakers, investors, and financial services firms. And between countries.”

The idea that the IMF could play a vital role in achieving a level playing field for disruptive technology and countering FUD from banking moguls such as JPMorgan’s Jamie Dimon and John Normand, provides much-needed support for the industry.