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The Central Bank of Brazil Adopts IMF Crypto Classification Guidelines

The Central Bank of Brazil has moved to classify bought and sold crypto assets as per the laid out International Monetary Fund (IMF) guidelines.

Brazil’s central bank announced its decision on Aug 26. Under the new IMF standards, traded cryptos will be classified as non-financial products and as such, will be counted as goods on the central bank’s balance sheet.

Trading cryptocurrencies involves the execution of foreign exchange contracts, and these transactions are recorded in the central banks export and import statistics. Brazil being a net importer of crypto assets has apparently led to the lowering of trade surplus on its balance sheet.

New guidelines to enable crypto payments

According to cointelegraph brasil, the classification of cryptocurrencies as property is a great thing. This is because being recognized as property will make them eligible to be used as a payment mechanism.  According to the central bank of Brazil, these classifications were recommended by the balance of payments statistics committee- an advisory committee to the IMF Statistics department that focuses on external sector statistics methodology.

IMF wants strict oversight on Libra

The IMF has also been vocal on Facebook’s proposed cryptocurrency Libra. The body’s chief economist Gita Gopinath joined other officials in recommending that regulators remain vigilant in observing and taking action against Facebook’s Libra. Gopinath called on regulators to act quickly and expeditiously. Just like congressional rep Maxine waters, Gopinath had some specific concerns about Libra as well

 “If you look particularly at countries that are not reserve currency countries, would this lead to backdoor dollarization? All of these questions and whether there will be enough checks and balances in place to prevent money laundering are very important.”

Just last month, Congress wrote to Facebook and directed that Libra be developed no further until determines its effect on the current financial order.

“Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action.”

Forbes contributor Enrique Dans also has a similar stance to IMF’s Gopinath. He called for strong oversight of crypto because according to him, Facebook has a bad history when it comes to client confidentiality.

Libra’s woes aside, there is a possibility that Brazil may just see a crypto boom with the acceptance of the IMF classification guidelines in the country. With cryptos being seen as property, it’s not unreasonable to believe that demand for them will soar. It is also very likely to be used as a means of exchange among those who do not fancy the country’s fiat currency.

Image Courtesy of Pexels

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