Blockchain Can Be Used To Regulate Cryptocurrencies – IMF Chief Lagardebr>
Christine Lagarde, the head of the International Monetary Fund (IMF), said the technology behind cryptocurrencies could also be used to regulate them.
In an IMF blog post on Tuesday, Lagarde said that she believes regulators can use blockchain technology to regulate bitcoin and other cryptocurrencies and prevent them from being used in connection with money laundering and other financial crimes.
“The same innovations that power crypto-assets can also help us regulate them,” Lagarde said. “To put it another way, we can fight fire with fire.”
Lagarde said that distributed ledger technology (DLT) can be used to speed up information-sharing between market participants and regulators.
“Those who have a shared interest in maintaining safe online transactions need to be able to communicate seamlessly,” she said. “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 addition to biometrics and artificial intelligence, Lagarde believes cryptography could help regulators remove the “pollution” from the crypto-assets ecosystem. She said 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,” she said.
According to the IMF managing director, applying the same securities rules to crypto assets as standard securities can also help increase transparency and alert buyers to potential risks.
“To be truly effective, all these efforts require close international cooperation,” Lagarde said. “Since crypto-assets know no borders, the framework to regulate them must be global as well. Countries will have to decide collectively that this path is worth pursuing. ”
Lagarde concluded by saying that it would not be wise to dismiss crypto-assets, regulators must welcome their potential but also recognize their risks. By working together, and leveraging technology for the public good, regulators can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.