In today’s world, marked by escalating geopolitical tensions, ideological divides, and economic instability, crypto assets have transcended their early experimental status on the financial periphery. They are now firmly embedded at the core of the global financial system.
Global Leaders Call for Serious Attention on Crypto Risks
Christine Lagarde, President of the European Central Bank, emphasized this growing influence during the International Monetary and Financial Committee (IMFC) meeting in April 2025. She urged policymakers worldwide to take crypto-related challenges seriously and be prepared. Lagarde stressed the importance of prudent financial policies and strengthening international cooperation on crypto regulation.
International Institutions Warn of Systemic Crypto Risks
The warnings align with concerns voiced by global standard-setting bodies such as the Bank for International Settlements (BIS), International Monetary Fund (IMF), Financial Stability Board (FSB), and Basel Committee on Banking Supervision (BCBS). Their latest reports highlight that stablecoins, decentralized finance (DeFi), and rising institutional investments have escalated crypto risks to systemic levels, making coordinated global policy-making imperative.
IMF Report Highlights Growing Adoption and Volatility
The IMF’s April 2025 Global Financial Stability Report (GFSR) clearly reflects this reality. Bitcoin has delivered significant returns since late 2024, with investments in its exchange-traded products (ETPs) surpassing $100 billion—demonstrating acceptance by both retail and institutional investors. Meanwhile, the stablecoin market has grown beyond $200 billion, largely fueled by positive regulatory expectations in the United States.
However, volatility has returned alongside growth. Bitcoin prices have dropped up to 25% from their peak this year. The IMF notes that stock market fluctuations now directly impact Bitcoin, indicating an increasingly deep link between crypto and traditional financial assets. This suggests that instability in crypto markets could have far-reaching effects on the broader financial system.
Risks of Rapid, Unregulated Crypto Adoption
The IMF further warns that rapid crypto adoption without clear regulation—especially in developing and emerging economies—could lead to capital flight, erosion of monetary sovereignty, and heightened risks of illicit financial activities. It recommends establishing clear regulatory frameworks, monitoring tokenization processes, and following the FSB-IMF global roadmap.
The Case for Coordinated Global Regulation
Leading regulatory bodies agree that effective regulation is the strongest tool to mitigate crypto risks. A globally coordinated oversight framework would reduce regulatory disparities, discourage illegal activities, maintain financial stability, and encourage responsible innovation.
Institutions such as the ECB, IMF, BIS, FSB, IOSCO, and BCBS have repeatedly warned that crypto assets can no longer be viewed as marginal technologies. Their deep integration into the financial system demands an organized, coordinated policy response.
India’s Silent Stance Raises Concerns
While countries worldwide actively engage in crypto regulation, India’s silence is surprising and potentially risky. Despite some measures on taxation and anti-money laundering, India has yet to introduce a comprehensive regulatory framework or a clear policy approach. This is particularly concerning given India’s leadership role in the G20’s crypto roadmap.
Regulation Should Foster Innovation, Not Stifle It
It is essential to understand that the goal of regulation is not to hinder innovation but to make it safe, transparent, and sustainable. The question today is not whether crypto should be regulated, but how it should be regulated to ensure both domestic and global financial stability.
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