The International Monetary Fund (IMF) has responded to Andorra’s request for assistance in recording Bitcoin transactions by providing technical advice. This move comes as Andorra seeks to bolster its financial oversight capabilities, particularly in cryptocurrency transactions.
IMF mission and recommendations
In September 2023, the IMF conducted a technical assistance (TA) mission in Andorra to enhance the country’s balance of payments statistics. Among the 56 topics requiring attention, Andorra highlighted its need for assistance in recording cryptocurrency transactions. The IMF’s guidance during the mission shed light on the current standards for recording Bitcoin-type crypto assets and anticipated changes in future international standards.
The Andorran Financial Authority (AFA) disclosed to the IMF that banks in Andorra must obtain prior approval to record Bitcoin and cryptocurrency transactions. However, as of now, no banks have sought such approval. In light of this, the IMF recommended that the AFA supervise cryptocurrency transactions and positions until September 2024. According to the IMF, this oversight is crucial for Andorra to compile accurate macroeconomic statistics.
IMF’s medium-priority recommendation
The IMF’s recommendation regarding monitoring crypto assets in Andorra was categorized as having medium priority. This suggests the importance of financial regulation and the urgency for Andorra to implement effective measures in this domain. By adhering to the IMF’s advice, Andorra aims to enhance its financial transparency and regulatory framework, bolstering investor confidence and financial stability.
Meanwhile, a recent study by the IMF highlighted the potential benefits of digital currencies for Pacific Island countries (PICs). These countries, characterized by their small size, diversity, and geographical isolation, could leverage digital currencies to address their unique needs. However, the IMF cautioned against adopting unbacked cryptocurrencies as national currencies, citing concerns over economic volatility and scalability restraints.
The IMF emphasized the importance of a regional approach to digital currency development among PICs. Such an approach would help mitigate the challenges associated with currency substitution by crypto assets and stablecoins. Additionally, the IMF advised PICs to refrain from rushing into the introduction of central bank digital currencies (CBDCs), emphasizing the need for thorough preparedness and cautious deliberation.
