How IMF Defined Bitcoin, Ethereum, and XRP

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The IMF made some definitions about cryptocurrencies such as Bitcoin, Ethereum and XRP in a report published recently. Evaluating the status of CBDCs within the scope of monetary law (money law), the IMF showed that there is a legal distinction for cryptocurrencies such as Bitcoin.

The report prepared by the IMF under the title of “Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations” included the legal examination of the digital central bank money (CBDC) and the evaluations made with the monetary law. One of the highlights of the report was the distinction between official and unofficial currencies. IMF; Bitcoin valued Ethereum and XRP among “unofficial” currencies.

It was also stated that currencies such as Bitcoin can be accepted as “money” under laws such as VAT, while they cannot – even be accepted – as a currency under some 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 said:

“These currencies are clearly defined by legislation and laws and must be distinguished from non-official 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, naturally, the value of currencies will be shaped by economic policies. ”

The status of CBDCs as currency is not clear

Concerning the legal basis of official currencies discussed by the IMF in the report, it was emphasized that CBDCs functioning without a legal basis may pose a risk especially for central banks. However, it was stated that it is not possible to determine the status of CBDCs, considering the 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 paper money, processed as official currency and protected under criminal law.

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“CBDCs are not expected to be a new currency.” Note that the IMF underlined that all monetary definitions made are just a new type of money and CBDCs.