A report co-written by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) is warning against blanket crypto bans. The global standard-setting agencies said that banning crypto is not an “easy option” and that it won’t eliminate the industry’s risks.

Blanket bans, which make all crypto activities illegal, can be costly, challenging to enforce and often result in migrations to other jurisdictions, which create “spillover” risks, the report said.

“A decision to ban is not an ‘easy option’ and should be informed by an assessment of money laundering and terrorist financing (ML/TF) risks and other considerations, such as large capital outflows and other public policy aims,” the report said.

The report, which is titled “IMF-FSB Synthesis Paper: Policies for Crypto-Assets,” combines the existing work of the IMF and FSB on crypto assets. The paper was developed at the request of India, which currently holds the G20 Presidency. The G20 is an intergovernmental forum connecting the world’s major economies. The paper will be presented at the G20 Summit this weekend where leaders will gather in India for two days to discuss major issues impacting the global economy.

“The collective recommendations provide comprehensive guidance to help authorities address the macroeconomic and financial stability risks posed by crypto-asset activities and markets, including those associated with stablecoins and those conducted through so-called decentralized finance (DeFi),” said the report’s executive summary.

A comprehensive regulatory framework should be the “baseline” in addressing both macroeconomic and financial stability risks. Jurisdictions should consider safeguarding monetary sovereignty, strengthening monetary policy frameworks, guarding against excessive capital flow volatility and adopting unambiguous tax treatment of crypto-assets, the report said.

The report comes as many countries around the world grapple with implementing regulations for the industry. The UK, the US, Hong Kong, Dubai and member countries of the European Union are all making headway with crypto regulation to varying degrees. The international bodies are hoping this report and other efforts will help establish global standards for the industry, especially in light of major collapses within the crypto industry last year, which had ripple effects across many different jurisdictions.

“The growing use and integration of crypto-assets in the global financial system has necessitated a coordinated set of international standards that form a comprehensive policy toolkit, as well as the effective implementation of these standards,” the report said.

The report lays out a roadmap that enables a “flexible and coordinated implementation” of policy for crypto assets. It also highlighted that some jurisdictions, particularly in emerging markets, may want to go beyond the baseline to address specific risks. 

The IMF previously published a framework to guide its members on crypto-assets outlining nine core elements of effective crypto-asset policies.