Crypto assets

IMF to prefer regulating crypto than banning it outright: Report

On the sidelines of the G20 meeting in India, IMF managing director Kristalina Georgieva said the agency would prefer to regulate crypto than an outright ban.

The International Monetary Fund would prefer to differentiate and regulate crypto assets rather than enforce an outright ban, though the nuclear option will remain on the table for now.

Speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained how the United Nations financial agency views digital assets and what it would like to see in terms of regulation.

“We are very much in favor of regulating the world of digital money,” and this is a top priority, she stated.

During an interview with Bloomberg published on Feb. 27, she responded to a question on her recent comments about a potential complete ban on cryptocurrencies. She said there was still much confusion around the classification of digital money.

“Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.”

Fully-backed stablecoins create a “reasonably good space for the economy,” however non-backed crypto assets are speculative, high risk, and not money, she added.

Citing a recent paper recommending global regulation standards, she said that crypto assets cannot be legal tender because they are not backed.

However, the option to ban cryptocurrencies “should not be taken off the table” if they begin to pose a greater risk to financial stability, she warned.

Nevertheless, good regulations, predictability, and consumer protection would be a better option, and banning would not need to be considered, said Georgieva.

Related: IMF exec board endorses crypto policy framework, including no crypto as legal tender

When asked what could cause the decision to ban crypto, she said that an inability to protect consumers from the rapidly evolving world of crypto assets would be the primary catalyst.

The IMF, the Financial Stability Board, and the Bank for International Settlements (BIS) are jointly preparing regulatory framework guidelines to be released in the second half of the year.

IMF prefers to regulate crypto than banning it outright: Report

On the sidelines of the G20 meeting in India, IMF managing director Kristalina Georgieva said the agency would prefer to regulate crypto than an outright ban.

The International Monetary Fund would prefer to differentiate and regulate crypto assets rather than enforce an outright ban, though the nuclear option will remain on the table for now.

Speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva explained how the United Nations financial agency views digital assets and what it would like to see in terms of regulation.

“We are very much in favor of regulating the world of digital money,” and this is a top priority, she stated.

During an interview with Bloomberg published on Feb. 27, she responded to a question on her recent comments about a potential complete ban on cryptocurrencies. She said there was still much confusion around the classification of digital money.

“Our first objective is to differentiate between central bank digital currencies that are backed by the state and publically issued crypto assets and stablecoins.”

Fully-backed stablecoins create a “reasonably good space for the economy,” but non-backed crypto assets are speculative, high risk, and not money, she added.

Citing a recent paper recommending global regulation standards, she said that crypto assets cannot be legal tender because they are not backed.

However, the option to ban cryptocurrencies “should not be taken off the table” if they begin to pose a greater risk to financial stability, she warned.

Nevertheless, good regulations, predictability and consumer protection would be a better option, and banning would not need to be considered, Georgieva said.

Related: IMF exec board endorses crypto policy framework, including no crypto as legal tender

When asked what could cause the decision to ban crypto, she said that an inability to protect consumers from the rapidly evolving world of crypto assets would be the primary catalyst.

The IMF, the Financial Stability Board, and the Bank for International Settlements are jointly preparing to release regulatory framework guidelines in the second half of the year.

North Korea stole more crypto in 2022 than any other year: UN report

A report submitted to the United Nations found North Korean cyber attacks have become vastly more sophisticated and raked in more crypto than ever before.

A confidential United Nations report has revealed North Korean hackers stole more crypto assets in 2022 than in any other year .

The UN report, seen by Reuters, was reportedly submitted to a 15-member North Korea sanctions committee last week.

It found North Korean-linked hackers were responsible for between $630 million and more than $1 billion in stolen crypto assets last year after targeting networks of foreign aerospace and defense companies.

The UN report also noted that cyber attacks were more sophisticated than in previous years, making tracing stolen funds more difficult than ever.

“[North Korea] used increasingly sophisticated cyber techniques both to gain access to digital networks involved in cyber finance, and to steal information of potential value, including to its weapons programmes,” the independent sanctions monitors saiin its report to the UN Security Council Committee.

Last week, a Feb. 1 report from blockchain analytics firm Chainalysis came to a similar conclusion, linking North Korean hackers to at least $1.7 billion worth of stolen crypto in 2022, making it the worst-ever year for crypto hacking.

North Korean hackers have been stealing more crypto than ever before. Source Chainalysis

The firm named the cybercriminal syndicates as the most “prolific cryptocurrency hackers over the last few years.”

“For context, North Korea’s total exports in 2020 totaled $142 million worth of goods, so it isn’t a stretch to say that cryptocurrency hacking is a sizable chunk of the nation’s economy,” Chainalysis said.

According to Chainalysis, at least $1.1 billion of the stolen loot was taken from hacks of decentralized financeprotocols, making North Korea one of the driving forces behind the DeFi hacking trend that intensified in 2022.

Chainalysis has revealed North Korean hackers tend to send large amounts of their stolen funds to mixers. Source: Chainalysis.

The firm also found that  North Korea-linked hackers tend to send large sums to mixers such as Tornado Cash and Sinbad. 

“In fact, funds from hacks carried out by North Korea-linked hackers move to mixers at a much higher rate than funds stolen by other individuals or groups,” Chainalysis said.

Related: North Korean hacking activity ceases after regulators implement KYC: Report

North Korea has frequently denied allegations of being responsible for cyberattacks, but the new UN report alleged North Korea’s primary intelligence bureau, the Reconnaissance General Bureau uses several groups such as Kimsuky, Lazarus Group and Andariel specifically for cyberattacks.

“These actors continued illicitly to target victims to generate revenue and solicit information of value to the DPRK, including its weapons programmes,” the UN report said.

Submitted before the 15-member council’s North Korea sanctions committee last week, the full report is reportedly due for public release later this month or early March.

Michael Saylor slams ‘misinformation’ about Bitcoin’s energy use

Michael Saylor claims Bitcoin mining could become a clean, profitable and modern industry that generates hard currency for remote locations in the developing world.

Ahead of Ethereum’s transition to proof-of-stake (PoS), Bitcoin (BTC) maximalist Michael Saylor has come out swinging against what he says is “misinformation and propaganda” about the environmental impacts of proof-of-work (PoW) BTC mining. 

The MicroStrategy executive chairman, who recently stepped down as CEO, shared a lengthy post on his Twitter account on Wednesday, detailing seven of his “high level thoughts” on BTC mining and its impact on the environment.

One of his key arguments was against the notion that PoW BTC mining isn’t energy efficient.

Instead, Saylor claims it is the “cleanest industrial use of electricity and is improving its energy efficiency at the fastest rate across any major industry.”

He backed up his argument with figures taken from the Q2 Global Bitcoin Data Mining Review published in July by the Bitcoin Mining Council, a group of 45 companies that claim to represent 50.5% of the global network, noting:

“Our metrics show ~59.5% of energy for bitcoin mining comes from sustainable sources and energy efficiency improved 46% YoY.”

Saylor’s argument comes as the BTC mining industry has received a lot of pressure over its alleged impact on the environment, which has even led to certain United States states taking steps to ban crypto mining.

Saylor claims that constant improvements to the network and “relentless improvement in the semiconductors,” makes mining far more energy efficient than large tech companies such as Google, Netflix or Facebook.

“Approximately $4-5 billion in electricity is used to power & secure a network that is worth $420 billion as of today,” argued Saylor:

“This makes Bitcoin far less energy intensive than Google, Netflix, or Facebook, and 1-2 orders of magnitude less energy intensive than traditional 20th century industries like airlines, logistics, retail, hospitality, and agriculture.”

Saylor also claimed that 99.92% of carbon emissions in the world are due to industrial uses of energy other than bitcoin mining.

Looking at the numbers, Saylor does not believe environmentalist arguments condemning PoW mining are fair.

Rather, in his opinion, it’s an attempt to “focus negative attention on Proof-of-Work mining” and distract authorities from the “inconvenient truth that Proof-of-Stake crypto assets are generally unregistered securities trading on unregulated exchanges.”

In one of the more high-profile legal cases at the moment, Ripple is embroiled in a lawsuit with the Securities and Exchange Commission (SEC) for allegedly conducting an unregistered securities sale in the form of Ripple’s XRP.

Related: Michael Saylor got wrecked, but Bitcoin investors needn’t panic

In closing, Saylor says all the negativity toward PoW mining distracts from the possible benefits for the world.

“Bitcoin mining can bring a clean, profitable and modern industry that generates hard currency to remote locations in the developing world, connected only via satellite link.”

Crypto assets are no longer niche and regulators need to catch up — IMF

Recent failures of crypto issuers, exchanges and hedge funds are major motivators behind better crypto regulation.

The past few years have seen crypto assets moved from being “niche products” to having more of a mainstream presence, prompting the need for more comprehensive regulation of the space, according to the International Monetary Fund (IMF).

In a new report authored by IMF capital markets director Aditya Narain and assistant director Marina Moretti, officials noted that crypto assets have firmly shifted away from being “niche products” to ones used for speculative investments, hedges against weak currencies and payment instruments.

The authors added that this, along with recent failures of crypto issuers, exchanges and hedge funds have “added impetus to the push to regulate.”

However, developing regulatory frameworks for crypto assets is an uphill battle, according to Narain and Moretti, highlighting the market’s rapid evolution, the difficulty of monitoring and the absence of workable skills between regulators among the more serious obstacles, stating:

“Regulators are struggling to acquire the talent and learn the skills to keep pace given stretched resources and many other priorities.”

The authors have also called out the inconsistent approach to crypto regulation among various regulators, instead arguing for a coordinated, consistent and comprehensive global crypto regulatory framework.

“Some regulators may prioritize consumer protection, others safety and soundness or financial integrity. And there is a range of crypto actors — miners, validators, protocol developers — that are not easily covered by traditional financial regulation,” they explained:

“A global regulatory framework will bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.”

Regulators around the world have continued to gather around the regulatory table.

In Europe, the final legal text for the long-awaited Markets in Crypto-Assets (MiCA) regulations are set to be released within the next four to six weeks. In the United States, a crypto regulation bill named the Responsible Financial Innovation Act is set to address some of the biggest questions facing the digital assets sector.

Related: Australia’s new government finally signals its crypto regulation stance

Even staunch crypto skeptics have started to fall in line with the idea of regulation over any widespread ban, with U.S. congressman Brad Sherman becoming the latest to change his tune after admitting the market “has too much money and power behind it,” to ban it now.