IMF Admits Bitcoin and Others As Economic Assets

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The International Monetary Fund (IMF) recently published a very interesting paper on digital assets to better seek consistency in their place and treatment in the financial system. What I have found interesting is that they are recognizing their value and uses in the global system of payments, store of values, utilities, among other uses that have been under development by many projects. This is essentially the institution that overseas currency and monetary policies around the world admitting the legitimacy of the blockchain based asset class!

However, the committee categorized these asset as non financial assets despite being recognized as economic assets. As they go deeper into the reasoning behind why they distinguish these two, I believe it is the fundamental reason why it is attractive to me and many others:

Nonfinancial assets can be used in an economic activity and can serve as store of value. Unlike financial assets, BLCAs have no counterpart liability, and are not issued or authorized by a central bank, government or any other institutional unit.

The fact that there is no “counterpart” liability means that it does not rely on the trust of any third party making it decentralized which is a fundamental differentiator of the asset class in general. In addition, they clearly admit that, like gold, these assets can certainly serve to store value and process payments. Unfortunately, they stop short and clearly state that it does not meet the definition of currency. However, they admit that the classification can change as the digital assets become more widely accepted as a medium of exchange.

This is a great paper that combines the disruptive blockchain technology with traditional financial market thinking. It is clear that there is no stopping the development and adoption of digital assets in the future which is why the major institutions are looking carefully to understand the implications of further broadening of these assets into the monetary and financial systems of all the economies of the world.

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