The International Monetary Fund (IMF) has recommended that Nigeria license global cryptocurrency exchanges as a part of its economic reformation measures.

According to a recent IMF report, the bid to integrate cryptocurrencies into its financial system aims to secure Nigeria’s position in the African cryptocurrency market. It recommends that “global crypto trading platforms be registered or licensed in Nigeria and subject to the same regulatory requirements applicable to financial intermediaries.”

“Authorities should ensure the application of AML/CFT preventive controls by crypto trading platforms and other virtual asset service providers through effective AML/CFT risk-based supervision.“

The report points out discrepancies in Nigeria’s balance of payments (BOP), particularly in Net Error and Omissions (NEO), which reflect unrecorded financial transactions. These discrepancies are attributed to several factors, including the “shift to using crypto assets for cross-border transactions,” often not recorded through traditional banking records.

Previously largely positive in 2020, the report portrays preliminary 2023 data that suggests “NEOs continue to be very large negative,” at close to $7.5 billion — 2% of Nigeria’s GDP.

Source: Central Bank of Nigeria, Haver, and IMF

The IMF suggests that, through regulation and licensing of cryptocurrency exchanges, Nigeria could attract international investment, support financial market stabilization, and potentially improve remittance mechanisms — significant due to the Nigerian diaspora.

The IMF endorsement for cryptocurrency adoption comes at a time when Nigeria faces worsening macroeconomic challenges, such as currency instability and inflation. Through the licensing of cryptocurrency exchanges, the IMF aims to utilize cryptocurrencies as a tool for more stable and efficient transactional processes.

This would potentially improve Nigeria’s governance over digital financial movement, decrease illegal financial flows, and mitigate fraud and money laundering risks associated with cryptocurrency transactions.

Recent evidence of this regulatory shift can be seen in the regulations posed by Nigeria’s SEC — set to ban peer-to-peer (P2P) cryptocurrency exchanges using Nigeria’s national currency, naira.

The Nigeria SEC Director General Emomotimi Agama indicated that the ban would aim to protect the naira from manipulation after “perceived impact on the exchange rate of the naira."

However, a ban on P2P cryptocurrency payments is a task previously considered close to impossible by industry advocates.

IMF Managing Director Kristalina Georgieva has expressed a cautious view on cryptocurrencies, stating that despite the recent approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the SEC, she sees cryptos primarily as an investment vehicle rather than equivalent to the Dollar.

In an interview with Yahoo, Georgieva stressed the distinction between money and assets, describing crypto as an asset class more akin to a money management fund than traditional currency. She emphasized the importance of portfolio diversification without suggesting that Bitcoin rivals the Dollar.

Interestingly, Georgieva’s comments coincided with the SEC’s approval of new spot Bitcoin-backed ETFs. She highlighted the dominance of the Dollar, attributing it to the size of the US economy and the depth of capital markets in the country.

Analysts in the crypto industry, including Gautam Chhugani from Bernstein, foresee significant potential in crypto investments following the ETF approvals. Chhugani, who previously predicted a BTC price of $150,000 by 2025, advised investors to view minor selloffs as opportunities in light of the asymmetric upside potential in the new Bitcoin adoption cycle.

Coinbase CFO Alesia Haas also sees the ETF approvals as a “landmark day for crypto,” noting that it marks just one step in a long journey. She believes the approvals will attract trillions of dollars that were previously unable to access crypto assets and Bitcoin.

Overall, Georgieva’s cautious stance on crypto aligns with the broader perspective that cryptocurrencies, particularly Bitcoin, are evolving as an investment class with unique characteristics rather than functioning as traditional currencies.

The post Cryptos lack full currency status, Says IMF ChieF appeared first on Baffic.

During her opening speech at the Singapore FinTech Festival, International Monetary Fund (IMF) Managing Director Kristalina Georgieva urged the public sector to “keep preparing to deploy” central bank digital currencies (CBDCs) and related payment platforms in the future.

Georgieva expressed her optimism toward the implementation of CBDCs around the globe, although making a reservation that “we have not yet reached the land” and there is still much uncertainty:

“Adoption of CBDCs is nowhere close. But about 60 percent of countries are exploring them in some form today.”

The executive believes that CBDCs can replace cash, offer resilience in advanced economies and improve financial inclusion in the underbanked communities. According to Georgieva, CBDCs can co-exist with “private money,” being its “safe and low-cost alternative.” 

Related: IMF director urges ‘financial inclusion’ via digitalization

Georgieva also highlighted the importance of technological infrastructure in CBDC projects, personal data protection and even the possible role of artificial intelligence (AI) in enhancing the national digital currencies. She put a particular emphasis on cross-border payment support:

“To the extent CBDCs are deployed, they must be built to facilitate cross-border payments, which are at present expensive, slow, and available to few. Again, we must start this work today so we don’t have to backpedal tomorrow.”

The IMF head presented its CBDC virtual handbook and marked the Bank for International Settlements (BIS) role in the public sector’s digital money experiments. 

The IMF has recently been active in its analysis of necessary crypto regulations. On Sept. 29, it proposed a crypto-risk assessment matrix (C-RAM) for countries to spot indicators and triggers of potential risks in the sector.

The IMF’s Synthesis paper — jointly prepared with the Bank for International Settlements (BIS) — was unanimously adopted by the “G20 Finance Ministers and Central Bank Governors Communique” in October.

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Authorities in Egypt recently allowed the local currency’s exchange rate versus the U.S. dollar to decrease by more than 60%. Additionally, the central bank raised interest rates by 600 basis points. Both steps were key conditions set by the IMF which Egypt had to meet before the approval of a new financial aid package. IMF […] Source: Bitcoin.com

The post Egypt Devalues Currency, Raises Interest Rates to Fulfill Key IMF Aid Requirement appeared first on Crypto Breaking News.

The IMF wants Pakistan to increase tax measures on crypto profits to secure a $3 billion bailout for its faltering economy.

The latest reports show Pakistan’s crypto industry is worth nearly $20 million. As of 2023, the country was ranked among the top five highest crypto investors worldwide, with 15 million of its population actively owning cryptocurrencies.

In negotiations over a $3 billion standby agreement with the IMF, the lender has advised Pakistan’s Federal Board of Revenue (FBR) to broaden Capital Gains Tax (CGT) coverage by including cryptocurrency transactions. The IMF also suggests reevaluating real estate and publicly traded securities tax brackets to ensure taxation on all profits, independent of ownership duration.

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Under the proposed guidelines, real estate developers in Pakistan would have to record and declare every transfer of real estate interest before the finalization and official registration of property titles. Non-compliance with these regulations could lead to fines, including secondary liability for outstanding taxes. This initiative targets to regulate the common practice of trading plot files in housing projects.

After Pakistan accepts the terms, the IMF plans to release approximately $1.1 billion, the remaining portion of the bailout agreement from the previous summer. This agreement prevented Pakistan from defaulting on its sovereign debt.

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International Monetary Fund (IMF) managing director, Kristalina Georgieva, declared that the US dollar’s status quo remains as it retains its distinct identity, while cryptocurrency, in essence, functions as an investment vehicle.

This perspective underscores the IMF’s understanding of the evolving financial landscape, recognizing the inherent nature of traditional currency alongside the emerging role of cryptocurrency as an alternative investment instrument.

“Our view is that we have to differentiate between money and assets. When we talk about crypto, we are actually talking about an asset class. It could be backed up and in that sense, more secure and less risky, or it could be not backed up and therefore a riskier investment. But it is not exactly money. It’s more like a money management fund,” said Kristalina Georgieva, managing director of IMF.

Georgieva made this comment in response to the Securities and Exchange Commission’s (SEC) recent decision, which facilitated the introduction of new exchange-traded funds (ETFs) backed by spot Bitcoin, that happened last week. 

Regulatory authorities have granted approval for financial institutions, including Cathie Wood’s Ark and BlackRock, to launch newly endorsed ETFs. The approval extended to a total of 11 spot Bitcoin ETFs. With this development, investors can now access exposure to the world’s largest cryptocurrency without the necessity of direct ownership. The ETFs commenced trading last Thursday, prompting the cryptocurrency community to further shift its focus towards the possible approvals of Ethereum ETFs anticipated later this spring.

However, despite the recent attention surrounding Bitcoin, Kristalina Georgieva does not perceive that the day is imminent when cryptocurrency will rival the stature of the dollar.

“Look, this day, if it exists, is so far in the future that I think it is not very useful to talk about it. Why is the dollar today a dominant currency? Because of the size of the US economy and most importantly, the depth of the capital markets in the US. So I, for one, am not in a rush to turn my dollars into another currency. It doesn’t mean that you shouldn’t, you know, diversify. But, I wouldn’t worry too much about [Bitcoin rivaling the dollar]. There are things that make me lose sleep — that’s not one of them,” explained Kristalina Georgieva.

IMF Navigates Regulatory Landscape for Cryptocurrencies

The IMF has long maintained a watchful and cautious stance regarding cryptocurrencies. As a global financial institution, the IMF acknowledges the transformative potential of digital currencies but emphasizes the importance of addressing associated risks.

In 2023, the entity published a roadmap aimed at orchestrating measures to mitigate the potential impact of cryptocurrency  assets on macroeconomic and financial stability. The document outlined specific timelines for IMF and G20 members to incorporate recent recommendations on cryptocurrency regulation from both the Financial Stability Board and IOSCO–a global consortium of securities regulators. 

This development marked a notable shift in regulatory perspectives, evolving from a period of perceived minimal threat within the sector to a more stringent stance, particularly following the collapse of the FTX cryptocurrency exchange.

Recently, Kristalina Georgieva emphasized the imperative for enhanced regulatory oversight of cryptocurrencies, citing the potential risks they pose to global financial stability. These remarks were made during a digital currencies conference held in Seoul, South Korea, underscoring the growing recognition of the need for robust regulatory measures in response to the evolving landscape of digital currencies.

In a collaborative conference involving representatives from the South Korean government and central bank, Kristalina Georgieva also delineated the IMF’s objective of establishing a more efficient, interoperable and accessible financial system through the implementation of regulatory measures aimed at addressing the risks posed by cryptocurrencies. 

Emphasizing that the intention is not to revert to a pre-cryptocurrency era, but rather to foster innovation responsibly, Kristalina Georgieva highlighted the importance of a balanced approach towards embracing financial advancements while safeguarding against potential risks.

Georgieva’s recent commentary reflects the IMF’s nuanced understanding of the evolving financial landscape and its commitment to maintaining a cautious approach—balancing financial advancements while mitigating associated risks in the evolving cryptocurrency landscape.

The post IMF Managing Director Georgieva Identifies Crypto as an Asset Class, Emphasizes Dollar’s Stability appeared first on Metaverse Post.

Crypto Taxation in Pakistan Pushed by IMF

NAIROBI (Coinchapter.com) – Pakistan is poised to introduce regulations for crypto taxation, following recommendations by the International Monetary Fund (IMF) as part of an economic bailout agreement. The proposed tax structure would see the integration of capital gains tax on cryptocurrency investments, potentially generating additional revenue.

IMF pushes Pakistan crypto taxation. Source: X

The IMF recommends taxing capital gains more robustly, including cryptocurrency earnings. This suggestion is part of a broader plan presented to the Federal Board of Revenue (FBR). As a new and emerging asset class, the IMF considers cryptocurrencies a prime target for capital gains taxation.

Stringent Crypto Taxation on the Horizon?

IMF pushes Pakistan to revise tax brackets for real estate and stocks, aiming for fairer capital gains taxation. The proposal seeks to end the exemption on capital gains once assets reach a certain holding period.

According to local media, the IMF has called for binding property developers to track and report all transfers prior to the completion and registration of property titles. Failure to comply could result in hefty penalties, potentially curbing the rampant practice of buying and selling property files before legal completion.

Reforming Capital Gains Taxation

The IMF’s guidance further emphasizes reviewing taxation rates for capital gains on real estate and listed securities. The objective is to ensure consistent taxation of investment returns while eliminating loopholes that currently allow certain assets to avoid capital gains tax if held for specific periods.

These IMF-proposed amendments to the Pakistani tax code signal a significant shift towards a more comprehensive and streamlined taxation system. If implemented as part of the upcoming budget for the fiscal year 2024-2025, Pakistan could see a boost in revenue collection. This increased revenue would bolster the nation’s efforts to address the complex economic problems it currently faces.

Despite potential resistance, proposed crypto taxation reveals the IMF’s commitment to reforming Pakistan’s tax system and widening its revenue streams. However, the $3 billion bailout targets stabilizing Pakistan’s troubled economy, which have been hit by complex governance issues, hyperinflation, geopolitical tensions, natural disasters.

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