Cryptocurrency regulation: BoG, SEC must collaborate closely to align risk assessments – IMF

The International Monetary Fund has urged the Bank of Ghana and the securities and Exchange Commission to collaborate closely and align their risk assessment frameworks and supervisory action plans for crypto markets and activities.

According to the Fund, this collaboration should not be limited to the risk-based supervision of dual-regulated entities but should cover all current and potential cross-sector risks, including the monitoring of financial stability risks.

In a report titled “Regulation and Supervision of Crypto Markets and Activities”, the Fund said the crypto asset market is highly dynamic and innovative, requiring constant collaboration and exchange of information between the BoG and the SEC to prevent the emergence of blind spots or the exploitation by market participants of supervisory gaps for the purpose of regulatory arbitrage.

It added that the coordination committee should propose a formal collaboration structure that minimises the risk of regulatory arbitrage and the emergence of supervisory blind spots. “The structure should encompass all stages of the supervisory process, ranging from the alignment of reporting procedures to the alignment of sanctions”.

With respect to dual supervised entities, the Fund said coordination committee should develop effective guidance including a clear delineation of responsibilities between the relevant regulatory authorities.

To ensure the consistency and quality of the reporting data, the Fund also called on the BoG and SEC to consider the use of a single reporting framework for all supervised entities.

“The use of separate reporting frameworks may lead to undue operational complexities and costs, may undermine the exchangeability of data between the relevant authorities, and may lead to data gaps or double reporting”, it warned.

“The BoG and SEC should therefore consider how best to leverage existing frameworks and data reporting solutions, such as eM-Tech which is currently used by the BoG for real-time reporting by sandbox entities”, it added.

It continued that if a unified reporting framework should not be appropriate, the authorities should align their reporting templates for crypto markets closely to allow for a seamless exchange of supervisory data and information subject to legal permissibility.

Ghana is the fifth largest crypto market in sub-Saharan Africa with adoption increasing.

Data suggests that between 8% and 17% of the population have bought or sold crypto, with estimated annual crypto transactions around $21 billion.