International Monetary Fund (IMF) Chief Christine Lagarde said that crypto markets must be regulated by the same laws that apply to the traditional markets in an IMF blog post published today, March 13. The post, “Addressing the Dark Side of the Crypto World,” begins by praising the virtues of Blockchain technology, which she refers to as an “exciting advancement that could help revolutionize fields beyond finance.” However, Lagarde adds that regulators must “understand the peril that comes along with the promise.”
In terms of specific ways to enact regulations that will protect consumers in the crypto markets, Lagade writes that one must “fight fire with fire.” She brings up two examples: using digital ledger technology (DLT) to “create registries of standard, verified, customer information along with digital signatures,” and using biometrics, artificial intelligence, and cryptography to more quickly find suspicious transactions.
As cryptocurrencies are decentralized, anonymous, and have no inherent need for a central bank, Lagarde sees a potential for their use in money laundering and financing terrorism. She mentions the example of darknet marketplace Alphabay, which had more than $1 bln exchanged through crypto on its platform by the time it was shut down in July 2017.