Finance Minister Colm Imbert has said the government will not support cryptocurrency amid questions from the opposition about alternative-currency business models in the Senate on Tuesday. Citing an International Monetary Fund (IMF) assessment that said Trinidad and Tobago’s lack of regulatory framework for cryptocurrencies may be limiting the country’s ability to develop alternative-currency business models, opposition senator Damian Lyder asked what policy measures, if any, are being taken to address this issue.
Describing the question as “astonishing,” Imbert said the IMF had sounded several warnings in a report earlier this year that adopting unbacked crypto assets like bitcoin would have severe implications for macro-financial stability.“They went on to explain why adopting crypto assets could threaten the effectiveness of monetary policy transmission and sovereignty.
“Crypto assets without credible backing pose financial stability risks due to the volatile prices, and where declaring a crypto asset legal tender may create fiscal risks, this will cause risk to public finances.
“In terms of external stability, the entire financial monetary system can be put at risk by adopting cryptocurrency. In terms of capital flow stability, crypto assets drive higher gross foreign capital positions and more volatile capital flows,” he said.“In terms of the structure of financial systems, crypto assets with an open architecture are hazardous because anybody can contribute to these crypto assets. They’re prone to fraud and market integrity risks, and it could destabilize the entire international banking sector.
“Cryptocurrency is also the currency of use by drug traffickers, money launderers, and persons who operate on the dark web, and therefore, I found this question astonishing.”He highlighted failures in the cryptocurrency sector; Imbert cited a May 2022 Terra US-dollar collapse, which cost investors US$45 billion.
He also said that in June of that year, a cryptocurrency company, Three Arrows Capital, was forced into liquidation, causing investors a loss of US$3 billion. He said FTX trading collapsed in November 2022, costing investors up to US$50 billion.
Imbert cited several other collapses in cryptocurrency that occurred up to this month, costing investors billions of US dollars in each instance.“We have a situation where the whole world knows cryptocurrency is dangerous. The world knows cryptocurrency is the preferred currency of criminals, and the entire world knows crypto assets are backed by nothing.
“Why on earth would a question come to me, as Minister of Finance, therefore, as to whether I may be wishing to develop alternate currency business models?” he said.“The answer is we are not doing that. We are not getting involved with cryptocurrency.
“It is dangerous, and as the custodians of the treasury and the public’s purse, we are not putting the public’s assets at risk.”Given this stance, Lyder asked if Imbert intended to table legislation to outlaw cryptocurrencies.
Imbert replied that it is not considered legal tender in TT.