According to the chief of the International Monetary Fund, Christine Lagarde, cryptocurrencies will be regulated by the government. In an interview with CNN Money’s emerging markets editor John Defterios, Lagarde declared, “It’s inevitable.” She added, “It’s clearly a domain where we need international regulation and proper supervision.” Lagarde spoke in Dubai for the World Government Summit. She stated IMF’s role in preventing the illicit use of virtual currencies to finance terrorism or launder money. She also advised would-be regulators that the focus need to be on activities done using digital currencies and not solely on entities. She emphasized the importance of knowing if one has appropriate license and is adequately supervised.
Since digital currency was launched in 2009, its operation has been largely unregulated. However, central banks and governments are currently ramping up efforts to warn investors against possible scams. This was seen when the Federal Bureau of Investigation as well as the United States Securities and Exchange Commission clamped down on fundraising fraud allegedly initiated by traders and cryptocurrency companies. Cryptocurrency trading has been curbed in China as well as South Korea. A probable digital currency ban in India have encouraged digital currency costs to be volatile.
Government officials who were in Davos to attend the recent World Economic Forum similarly expressed their support to have digital currencies regulated. According to Steven Mnuchin, U.S. Treasury Secretary, “We encourage fintech, we encourage innovation, but we want to make sure that all of our financial markets are safe and aren’t being used for illicit activities.” The British Prime Minister, Theresa May, shared the same sentiment when she declared that cryptocurrencies needed to be looked at by the UK government seriously, “because of the way they are used, particularly by criminals.” The value of the Bitcoin cryptocurrency plummeted to as low as $8,350 – a 40% decrease from last month. Its peak value was pegged at $19,343 on December 2017.