Elements of Effective Policies for Crypto Assets

Policy Papers, February 23, 2023

Source details

Purpose: Address questions by Fund members on how to respond to the rise of crypto assets and the associated risks.
Core approach: Define and classify crypto assets based on their underlying features and describe their purported benefits and potential risks.
Deliverable: Present a policy framework for crypto assets that aims to achieve key policy objectives such as macroeconomic stability, financial stability, consumer protection, and market and financial integrity.
Caveat: The framework will not fix any underlying crypto design flaws (for instance, the lack of a credible nominal anchor, payments finality, or scalability).

Crypto assets are defined and classified in the paper based on their underlying features.
Classification supports tailoring policy responses to differing asset designs and functions.

Purported benefits: (As described in the paper) potential efficiencies, innovation in payments and finance, and other claimed advantages tied to crypto asset designs.
Potential risks: (As described in the paper) risks to macroeconomic stability, financial stability, consumer protection, and market and financial integrity.

Primary policy objectives the framework aims to achieve:
- Macroeconomic stability
- Financial stability
- Consumer protection
- Market and financial integrity
The framework outlines key elements necessary to ensure these objectives are met (elements are framed around the definitions, classifications, and identified risks).

Explicit limitation: The policy framework does not remedy inherent design shortcomings of some crypto assets (for instance, the lack of a credible nominal anchor, payments finality, or scalability).
Focus: Policy measures aimed at mitigating risks and achieving policy objectives rather than altering protocol-level design flaws.