IMF Cautions Against Crypto as Legal Tender, Coinbase Offers Contrary View – Will More Countries Adopt Bitcoin as Official Money?

Coinbase has pushed back on recent comments made by the IMF, regarding digital currencies. The International Monetary Fund (IMF) recently cautioned against digital currencies. But Coinbase is more convinced that cryptocurrencies are the way forward.

In a recent tweet, Coinbase refers to money as a medium of value that is constantly evolving. As such, digital currencies are the most advanced form of this medium of exchange. Coinbase wrote in the tweet.

Money is always changing. And crypto moves money forward.If you’re in DC this month, stop by Capitol South Station to see where money has been in the past, and where it’s all going in the future.

The tweet comes not long after the IMF attempted to make a case against digital currencies. The organization also highlighted the significance of its position within different global economies.

In a blogpost, the IMF cites the failures of the FTX cryptocurrency exchange, along with the downfall of Terra Luna, as pointers to the fact that new policies are necessary for the protection of investor funds, and the prevention of investment losses.

Additionally, the blogpost also highlighted the increasing dominance of stablecoins. It explained that these forms of digital currencies pose a major risk to fiat currencies. Furthermore, the IMF believes that they have the potential to substitute existing fiat currencies on a global scale.

IMF speaks on why Digital currencies should not be adopted as legal tender

Laying out its key recommendations, the IMF states the necessity for transparency and consistency, and coherent monetary policy frameworks, as an effective response to the risks that digital currencies pose.

Going forward, the IMF is reiterating one of its most consistent talking points: digital currencies should not be legal tenders. The IMF wrote.

To protect national sovereignty, it is important not to grant crypto assets official currency or legal tender status. Doing so would require accepting them in many jurisdictions for tax payments, fines, and debt settlements, and could generate fiscal risks for government finances, and could threaten financial stability or rapid inflation.

Notably, the IMF made a similar statement in the past, in an attempt to rebut El Salvador’s decision to adopt Bitcoin as legal tender. Although the country proceeded with its adoption of Bitcoin as a national currency, the IMF remains critical of the move.

Speaking on market volatility, the IMF is convinced that managing policy inflows is necessary to address the volatility associated with crypto. In addition to this, the IMF is calling for regulators to strengthen its compliance efforts, by enforcing more unambiguous tax policies.