IMF chief Christine Lagarde has called for a crackdown on bitcoin by using the technology behind the digital currency to “fight fire with fire”, The Guardian reports.
The head of the International Monetary Fund said authorities around the world could harness the potential of cryptocurrencies to help bring them under control, warning that failure to do so would allow the unfettered development of a “potentially major new vehicle for money laundering and the financing of terrorism”.
Writing in an IMF blogpost, Lagarde said the same innovations that powered cryptocurrencies could be used to help regulate them. “We can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.”
Distributed ledger technology, which enables the authentication of transactions without them needing to be administered or guaranteed by a central authority, could be used to speed up information sharing between regulators to improve their monitoring of the financial system.
She said the developments driving cryptocurrencies, including blockchain, were exciting advances which could help revolutionise financial services by providing low-cost payment methods for those who did not have bank accounts. However, she said, there was “peril that comes along with the promise”.