IMF Says Digital Currency Technology Can Be

The director of the International Monetary Fund says governments around the world could take advantage of technology to stop illegal activity.

The anonymity of currencies like Bitcoin means they are used by criminals and terrorists, he said. But technology could turn against such nefarious activities. Regulators around the world have called for greater oversight of cryptocurrencies. Although the technology behind digital assets has been praised as a way to speed up financial transactions and reduce costs, the anonymity behind cryptocurrency trading is a major concern, Lagarde said in a blog post.

What makes the technology so attractive is also what makes it “dangerous,” she said, as it can be used as a “new and important vehicle for money laundering and terrorist financing. But he said that the technologies behind cryptocurrencies can be leveraged to mitigate this “danger. The same innovations that power crypto assets can also help us regulate them,” he said. “To put it another way, we can fight fire with fire.

Distributed Ledger Technology (DLT), the technology underlying cryptocurrencies, is defined by the UK government as “a database of assets that can be shared across a network of multiple sites, geographies or institutions. Lagarde said DLT technology “can be used to accelerate the exchange of information between market participants and regulators. The technology that enables instant global transactions could be used to create .

Additionally, other technologies such as biometrics, artificial intelligence and cryptography “can improve digital security and identify suspicious transactions in near real time,” he said. standard and verified customer information records along with digital signatures. Regulators must use the same rules “to protect consumers in digital and non-digital transactions,” he added. Industry body Crypto UK said regulatory certainty was “essential to attracting the best in this industry to call the UK home.”

But a spokesperson said regulators should not “just adapt non-digital rules to this unique and evolving sector. Working with the industry to develop a bespoke framework is crucial to capturing the true value of this technology, while eliminating illegal activities,” the spokesperson added.

 

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