By Ayomide Ogunsakin
The many crypto regulatory developments that have occurred across the world in recent times are a testament to the turbulence that the crypto industry will face in its quest for global adoption.
From all indications, it is evident that regulators all over the world are pushing for more oversight and control over digital assets.
Given this, how have international financial organizations been reacting and contributing to these developments and the understanding of cryptocurrencies and DeFi?
In this Issue, we look into some international financial bodies and the roles that they play in this regard.
1. International Monetary Fund (IMF)
The IMF, based in Washington D.C., is an organization comprising of 190 countries, working to foster global monetary cooperation and financial stability around the world.
It has a mandate to “safeguard the stability of the international monetary and financial system” and it recognizes the fact that crypto assets are changing the system profoundly.
To this effect, IMF conducts extensive research on cryptocurrencies, exploring their implications and impact on the monetary policy, financial stability, and economic growth of the global economy.
It also issues reports, fintech notes and blog posts (imf.org) to provide in-depth analyses of crypto-related topics, insights on the regulatory challenges attached to help member states understand the implications of adopting or regulating crypto, all in a bid to ensure that global crypto regulation is comprehensive, consistent and coordinated.
2. Financial Action Task Force (FATF)
FATF is an organization that established global standards to combat money laundering and terrorist financing.
In 2019, it introduced guidelines known as the “Travel Rule”, requiring crypto exchanges and wallet providers to share customer information during transactions.
This requirement targets the anonymity of crypto transactions in order to prevent money laundering, enhance accountability in crypto transactions, and align them with regulations in the traditional financial sector.
By following the rule, exchanges can detect suspicious users and avoid fraud to protect their reputation and avoid fines from regulators.
3. International Organization of Securities Commissions (IOSCO)
This is an international body that pulls securities regulators from different countries together—and is now developing international standards for crypto regulation.
It recently unveiled some regulatory framework proposals for the crypto industry (See here: cointelegraph.com/news/iosco-unv…).
By sharing information and best practices among its member countries, IOSCO aims to establish consistent regulatory frameworks, ensuring investor protection and market integrity in the crypto space.
4. Bank for International Settlements (BIS)
The BIS is a financial institution owned by the central banks of different countries.
Headquartered in Basel, Switzerland, BIS started in 1930 and its role is to foster international monetary and financial stability and cooperation by serving as the bank for member central banks.
As the bankers’ bank, the BIS serves the financial needs of member central banks. It provides gold and foreign exchange transactions for them and holds central bank reserves.
It is also a banker and fund manager for other international financial institutions.
BIS conducts research and provides insights into various aspects of global financial systems.
Thus, it has published reports on the potential risks and benefits of cryptocurrencies and central bank digital currencies (CBDCs).
5. The World Bank
This is an international financial institution for development, which provides loans and grants to the governments of low and middle income member states, to improve their economies and help them pursue capital projects.
The World Bank seems to understand the role of crypto in financing, as it has initiated research and projects that leverage crypto and blockchain technology to improve financial inclusion in developing countries.
By exploring innovative use cases, such as cross-border payments and chain financing, it contributes to the understanding of practical applications of crypto technologies in real-world scenarios.
6. European Securities and Markets Authority (ESMA)
ESMA is a regulatory agency for the European Union (EU). It has been actively involved in regulating activities and developments in the crypto industry, within the EU.
ESMA provides guidance to member states on regulating crypto and initial coin offerings (ICOs), and makes efforts to ensure consistent regulatory approaches across EU countries and foster investor confidence in the crypto industry.
These organizations have been collaborating, making research, and engaging with policymakers globally, in order to foster a coordinated international approach to regulating cryptocurrencies and DeFi.
Their contributions are therefore instrumental in the shaping of policies that balance innovation with investor protection and financial stability.
_Ayomide Ogunsakin, the brain behind the DeFi Law Digest, is a law undergraduate at the Obafemi Awolowo University (OAU), Ile-Ife. She can be reached through email: defilawdigest@gmail.com_
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