IMF head Christine Lagarde at the World Economic Forum in in Davos in 2013. Photo: World Economic Forum
IMF head Christine Lagarde at the World Economic Forum in in Davos in 2013. Photo: World Economic Forum

What a difference a month makes. In March, the head of the International Monetary Fund, Christine Lagarde, wrote a blog entitled “Addressing the Dark Side of the Crypto World.”

“The same reason crypto-assets – or what some people call crypto-currencies – are so appealing is also what makes them dangerous,” said Lagarde. “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.

“The result is a potentially major new vehicle for money laundering and the financing of terrorism.”

In a blog published on Monday, entitled “An Even-handed Approach to Crypto-Assets,” Lagarde was at pains to also focus on the “the promise” that cryptos offer.

“A judicious look at crypto-assets” writes Lagarde “should lead us to neither crypto-condemnation nor crypto-euphoria.”

The IMF head argues that there are comparisons with the few start-ups that survived the dot-com era and went on to help transform our lives. Crypto companies could have a significant impact on how we save, invest and pay our bills, which is why, says Lagarde, governments “should keep an open mind and work toward ­­an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit.”

Lagarde says the benefits of cryptos are numerous. They are fast, inexpensive, secure and could bring “diversification of the financial landscape, a better balance between centralized and de-centralized service providers.”

Now crypto-assets “do not pose an immediate danger” to the existing finical system but, argues Lagarde, to have real influence they do need to “earn the confidence and support of consumers and authorities. An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play.”

It is the job of IMF, concludes Lagarde, to help develop “an even-handed regulatory agenda, one that protects against risks without discouraging innovation … A clear-eyed approach can help us harness the gains and avoid the pitfalls of the new crypto-assets landscape.”

It is another big and bold step for crypto, in the direction of mainstream adoption.

So what will next month bring?

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