IMF says banning crypto assets may not be effective long-term

Quick Take

  • Banning crypto assets in a country may not be the most effective approach to managing risk over the long run, according to the International Monetary Fund.
  • The IMF’s latest stance contrasts a statement in February in which some of its directors said that “outright bans should not be ruled out.”

Banning crypto assets may not be an effective approach for countries to manage risk over the long run, according to the International Monetary Fund.

“While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run,” the international financial organization said in a post discussing interest in central bank digital currencies in Latin America and the Caribbean. 

Instead, the IMF said that “the region should focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics.”

As cryptocurrencies present varying risks in different countries, the IMF said the emphasis should be on mitigating such risks while still “leveraging the potential benefits of the technological innovation associated with crypto assets.”


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IMF's previous position on crypto bans

The position contrasts IMF comments made in a statement in February, relating to an executive board meeting earlier that month where it ​​called for a “coordinated response” over fears crypto could undermine the global monetary system. While directors agreed strict bans on crypto were “not the first-best option," some directors thought “outright bans should not be ruled out."

Latin America and the Caribbean are leading the way in the adoption of digital assets, according to IMF research, with Brazil, Argentina, Colombia and Ecuador ranked among the top 20 for global adoption. El Salvador hit the headlines in 2021, giving bitcoin legal tender status. Other countries in the region are making significant progress in introducing CBDCs to enhance financial inclusion or lower cross-border payment costs, the IMF said. 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

James Hunt is a reporter at The Block, based in the UK. As the writer behind The Daily newsletter, James also keeps you up to speed on the latest crypto news every weekday. Prior to joining The Block in 2022, James spent four years as a freelance writer in the industry, contributing to both publications and crypto project content. James’ coverage spans everything from Bitcoin and Ethereum to Layer 2 scaling solutions, avant-garde DeFi protocols, evolving DAO governance structures, trending NFTs and memecoins, regulatory landscapes, crypto company deals and the immersive metaverse. You can get in touch with James on Twitter or Telegram via @humanjets or email him at [email protected].


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