The head of the International Monetary Fund (IMF) wants to start a blockchain arms race.
Christine Lagarde, the IMF’s managing director, wrote in a Tuesday blog post that she believes regulators can use blockchain or other distributed ledger technologies (DLT) to regulate Bitcoin and other cryptocurrencies and prevent them from being used in connection with money laundering and other financial crimes.
“The same reason crypto-assets—or what some people call crypto-currencies—are so appealing is also what makes them dangerous,” Lagarde wrote. “These digital offerings are typically built in a decentralized way and without the need for a central bank. This gives crypto-asset transactions an element of anonymity, much like cash transactions.”
Elsewhere in the post, which bears the ominous title “Addressing the Dark Side of the Crypto World,” Lagarde explained that she believes DLT and other digital technologies can be used by financial regulators across the globe to “communicate seamlessly” and create registries of customer information and digital signatures that would be linked to biometric information.
“Indeed, the same innovations that power crypto-assets can also help us regulate them,” she said. “To put it another way, we can fight fire with fire.”
Previously, Lagarde has said that cryptocurrency regulation is “inevitable” and has harped on this technology’s associations with illicit activities.
But though marketed as a way to combat terrorism and other nefarious activities, it’s easy — as Motherboard noted in its coverage of the proposal — to see Lagarde’s vision for a DLT-based surveillance platform leading to a “dystopian scenario” in which governments use DLT to track not only the movement of money but also people.
“As I have said before, it would not be wise to dismiss crypto-assets; we must welcome their potential but also recognize their risks,” Lagarde concluded. “By working together, and leveraging technology for the public good, we can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.”
Meanwhile, a growing number of regulators are calling for international coordination on cryptocurrency regulation. On Tuesday, Japan became the latest country to announce that it will formally call for G20 members to discuss international cryptocurrency regulations at the group’s upcoming finance summit.
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Last modified: March 4, 2021 5:05 PM