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IMF says crypto could be used to hide corruption proceeds

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The International Monetary Fund (IMF) is calling for a clear regulatory framework for the digital asset sector. Currently, the crypto market sector has a valuation of above $2 trillion, and the sector continues to attract new investors despite the lack of a clear regulatory framework.

IMF links crypto to corruption

A recent report surveying 55 countries noted that cryptocurrency usage was significantly high in corrupt countries. The global body noted that crypto “may be used to transfer corruption proceeds or circumvent capital controls.”

The IMF study involved 2000 to 12,000 respondents from every 55 countries. The respondents were questioned about whether or not they owned cryptocurrencies in 2020. The study is similar to other studies that have been done by the IMF to advocate for crypto regulations globally.

In 2021, the IMF published a blog post about how cryptocurrencies were being adopted in the traditional financial sector. The IMF noted that it was hard for policymakers to monitor the risks presented by cryptocurrencies because of the lack of a clear regulatory framework.

The IMF has also advised virtual asset service providers (VASPs) to seek the necessary licenses and create clear guidelines used by regulated financial firms that interact with crypto.

Crypto regulations globally

Countries have been doubling down their efforts to regulate the cryptocurrency sector. In the UK, virtual assets are regulated by the Financial Conduct Authority. The FCA recently added five firms to the list of approved crypto service providers in the UK.

The FCA requires that VASPs be licensed before operating in the country. The UK is also working on the best way to offer regulatory clarity for the crypto sector. However, like in many jurisdictions, regulatory clarity is yet to be established.

In the US, President Joe Biden recently signed an executive order that urged federal agencies to work together and regulate crypto assets. The country is also taking bold steps to offer regulatory guidance on digital assets.

However, some countries, such as Singapore, have established clear crypto regulations. On the other hand, India has introduced a 30% tax on cryptocurrency gains.

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