The International Monetary Fund (IMF) has declared Bitcoin (BTC) and Ethereum (ETH) as the most widely-used virtual assets. IMF made this disclosure in a recently published documentation of periodic consultation technical analysis of financial management of member countries.
The US-based financial sector assessment program in its country report No.20/243, August 2020 edition in a bid to support its claims refers to data from coinmarketcap.com where BTC, ETH, and XRP were listed as the top three cryptocurrencies by market capitalization in the United States.
However, IMF pointed out that the fact that there is no federal agency regulating the BTC spot market aside for AML/CFT purposes which raise questions on the risks of derivatives on digital assets that are not securities but commodities.
According to IMF, the five U.S derivatives exchanges which currently list Bitcoin derivatives for trading, include LedgerX, ErisX, NADEX, CME, and ICE.
The absence of a comprehensive federal regulatory protocol, coupled with the unavailability of a federal agency to manage the non-securities digital assets spot market, has kept the buying and selling of BTC outside the regulations of the Federal Government and has raised several issues.
This lapse on the part of the Federal Government has led the creation of regulatory sovereignty by individual states, an example which includes the introduction of BitLicense by New York State Government, IMF noted.
Talking about the Commodity Futures Trading Commission (CFTC), the IMF in its report elucidated that the broad limitation attached to the commission’s anti-fraud and anti-manipulation authority would hamper its ability to exercise its role effectively with respect to the spot market of digital currencies which are commodities and not securities, as the CFTC is restricted to acting after the fact.
Nonetheless, IMF in the report, mentioned that the absence of a Federal regulatory protocol for digital assets has also been noticed by the federal and state legislators and that several legislative initiatives have been put in place in order to introduce extensive and more coherent regulatory guidelines, an example which includes the Crypto-Currency Act of 2020.
The Crypto-Currency Act 2020 as reported by IMF was proposed to tackle the problem of clarity as touching the particular agency that would be in charge of digital assets regulation.
Furthermore, the bill will divide cryptocurrencies into three categories such as Crypto-commodities, to be overseen by the CFTC; Crypto-currencies; FinCEN; and crypto-securities, which would be overseen by SEC.
These three categories as described in the bill, would definitely capture the world’s largest cryptocurrencies by market capitalization which includes Bitcoin, Ether, and XRP.