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The IMF made some definitions on cryptocurrencies like Bitcoin, Ethereum and XRP in a recently released report. By assessing the status of CBDCs under monetary law (monetary law), the IMF has shown that there is a legal distinction for cryptocurrencies such as Bitcoin.
The report prepared by the IMF under the title “Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations” included the legal examination of digital central bank money (CBDC) and assessments made with monetary law. One of the highlights of the report was the distinction between official and unofficial currencies. IMF; Bitcoin rated Ethereum and XRP among the “unofficial” currencies.
It has also been claimed that currencies such as Bitcoin can be accepted as “money” under laws such as VAT, while they cannot – not even be accepted – as a currency under other financial laws.
Attention was drawn to the distinction between currencies
The IMF has just shown the US dollar, the euro in the euro area and Japan as examples of official currencies and stated:
“These currencies are clearly defined by legislation and laws and must be distinguished from unofficial quasi-monetary currencies such as Bitcoin, Ethereum and XRP.
Monetary law is a law that shows how the value of official currencies is determined. Since the collapse of the Bretton Woods system, most of the official currencies have been valued within the foreign exchange market. Therefore, of course, the value of currencies will be determined by economic policies. “
The status of CBDCs as a currency is unclear
Regarding the legal basis of the official currencies discussed by the IMF in the report, it was pointed out that CBDCs that operate without a legal basis can pose a risk especially for central banks. However, it has been stated that it is not possible to determine the status of CBDCs, considering official currencies under the monetary law.
According to the IMF, in order for a currency to be used officially, that currency must be issued by the state or central bank, accepted with the value on the paper money, processed as the official currency and protected by criminal law.
“CBDCs shouldn’t be a new currency.” Note that the IMF pointed out that all monetary definitions made are just a new type of currency and CBDC.
