Why IMF Classifies Bitcoin as ‘Produced Non-Financial Asset’
As the date for the final global policy on stablecoins was disclosed at the just concluded IMF-World Bank Annual Meetings in Washington DC, it didn’t end there for the IMF and its works on crypto assets. This class of emerging assets was a talking point at the yearly event with a session dedicated to “What Do We Know about Crypto Assets” as anchored by Bo Zhao of the Secretary’s Department at IMF while Venkat Josyula from the Statistics Department and Sonja Davidovic from the Information Technology Department gave their talks.
Why classify crypto assets
Josyula noted that due to several developing factors, he and his team realized the time has come to discuss the implications of crypto assets on macroeconomic statistics touching on requests made to his department by some IMF member countries including Albania, Brazil and Georgia to help clarify how to record Bitcoin and other crypto assets on the latest transactions of macroeconomic statistics.
“These countries approached us as there were no international statistical standards given that crypto assets are a new phenomenon,” he says, hence his team started focusing on these issue. “Crypto assets combine the properties of currencies, commodities and intangible assets. They are digital representations of value made possible by cryptography and distributed ledger technology.”
While talking on the likely significance of Bitcoin mining activities on the domestic impact on member countries, he cited several countries grounded in the activity including China and the U.S. but stressed that Georgia is a lot more involved in it as the tiny country accounts for about 15% of the global supply of Bitcoin.
“This is estimated to be around 5% of their GDP or 10% of export of goods and services. When you compare it with other economic activities of Georgia, Georgia’s output from agriculture is around 6% of GDP. So you can understand such a small country like Georgia, how much this activity of mining is important,” he says.
Bitcoin as ‘Produced Non-Financial Asset’
According to IMF, Josyula says Bitcoin is classified as a non-financial crypto asset on a general level since it is one of those assets that has no claim on any issuer. He adds that they further classed Bitcoin as a produced non-financial asset as it comes into existence as an output of a production process like labor, capital, goods and services under the control, responsibility and management of mining companies. He explains:
“Our paper recommended that we classify Bitcoin like a crypto asset as a distinct category of valuables. Why? Because these assets are similar to processed metals which can be used as a store of value or in barter for the purchase of goods and services.”
Unlike with other digital tokens, he said only Bitcoin gave them problems to arrive at an international consensus on how to classify it as well as took them a lot of time. With the conclusion that the IMF has helped put in place a framework for the measurement of crypto assets in macroeconomic statistics consistent with the current guidelines, Josyula said the IMF will continue to monitor how the crypto world evolves with time. “However, we will continue to closely monitor developments on crypto assets and may update this guidance if the underline conditions substantially change in the in future.”
“Second, the most critical challenge going forward, is the collection of transactions and positions data on crypto assets. While there are many players in the crypto assets ecosystem … collection of transactions data from crypto exchanges and positions data from wallet providers could be the most efficient and accurate way. Ideally, such data should be provided to central banks and statistical offices in respective countries through some kind of international data exchange.”
Davidovic explained more about stablecoins and why they could be necessary in today’s global economy especially in countries with fewer options when it comes to payment systems and for remittances. She noted that in some countries where stablecoins have picked up, people tend to trust social media and telecom companies more than banks.