The Principality of Andorra has sought the technical input of the International Monetary Fund (IMF) on how to monitor cryptocurrency transactions, especially Bitcoin (BTC) transactions.
In Sept. 2023, the IMF undertook a technical assistance mission to the Principality of Andorra to help the country balance its payments statistics. The assistance mainly concerns the documentation of economic exchanges between residents and non-residents of the country.
IMF’s Technical Assistance
Renowned for its status as a tax haven, Andorra has sought technical help on various fronts, including the best practices for documenting cryptocurrency transactions. The IMF’s report provided guidelines concerning transaction records for crypto assets like Bitcoin and defined anticipated innovations in international financial standards.
Furthermore, the Andorran Financial Authority (AFA) reported to the IMF that Andorran banks demand prior authorization to record transactions involving Bitcoin and other crypto assets. However, the IMF responded that banks have yet to start requesting approvals.
IMF’s Recommendations
Furthermore, the global financial organization suggested that the Andorran regulator oversee monitoring transactions involving crypto assets until Sept. 2024. This recommendation, classified as a medium priority by the IMF, holds significance for Andorra as it helps the authorities compile essential macroeconomic statistics.
Notably, a recent study by the IMF has highlighted the impact of digital currencies in assisting Pacific Island countries (PICs) in addressing their unique currency requirements. PICs are small, diverse, and geographically isolated markets encompassing nations such as Papua New Guinea, Palau, Fiji, Tonga, and Samoa.
In addition, the IMF cautioned against using unbacked cryptocurrencies as national tender. Instead, it advocates for developing a regional strategy encompassing digital currencies, which could alleviate scalability constraints and economic instability challenges.
Meanwhile, the IMF warned island nations to exercise restraint in introducing central bank digital currencies (CBDCs) due to concerns regarding their readiness to implement them. It added that these nations’ primary focus should be regulatory oversight and regional collaboration.
