International Monetary Fund

Draft Resolution 1.3

Council: International Monetary Fund
Sponsors: Bulgaria, Finland, Republic of Korea, Israel, Australia.
Signatories: Brunei Darussalam, Kingdom of Netherlands, Poland, Sudan, Denmark,
Indonesia, Tunisia, Venezuela (Bolivarian Republic of), Bhutan, Croatia, Timor-Leste,
Mexico, Maldives, Ireland, Liberia, Serbia, Japan, Lebanon, Honduras, Italian Republic,
Republic of Singapore, France, Czech Republic, Sri Lanka, Oman, Papua New Guinea,
Mongolia, Saudi Arabia, People's Republic of China, Myanmar, Angola, Philippines,
Zimbabwe, Botswana, Argentina, Afghanistan, Kazakhstan, Thailand, Nepal, United Arab
Emirates, Greece, Cambodia.
Topic: The Emergence of Cryptocurrency

Acknowledging the need to address the problems of cryptocurrencies with regards to its
regulation,

Acknowledging I​ MF’s ​core purpose in maintaining the stability of the international

monetary system,

Informing the public of the dangers of cryptocurrency due to its volatility and
unpredictability,

Observin​g the evolution of technology and economy, cryptocurrency plays a major role
in modernizations,
 Stressing the fact that the world is currently in an economic recession due to the
pandemic,

Concerned​ about the sustainability of the economy and inflation in other countries,

Concerned ​about the misuse of technology leading to unregulated finance with the way
of cryptocurrency,

Noting ​with satisfaction the past efforts to fix the cryptocurrency system,

Integrating​ a Cryptocurrency taxation system of gains and value-added taxes,

Regulating​ the business and policy-makers to apply blockchain technology,

Recognizing the two factors that affect volatility being its intrinsic value and the
popularity of its usage,

Recognizing t​ he negative environmental impact of cryptocurrency mining,

On Emphasizing the Role of Cryptocurrency

1. Emphasizes ​that cryptocurrency does not intend to replace the currently available
currencies like fiat currency, but instead aims to alleviate poverty by lessening the price
that it usually requires to transact,
a. For example, there would be lower remittance cost for those transferring funds to
and from developing countries, which would help them. It would also help small
businesses in avoiding expensive credit cards, help migrants in allowing them to
easily transfer funds;
b. Cryptocurrency plays an important role in globalization. It is supposed to boost
economic growth, especially to contribute to investing and the stock market and
make it easy for people to access bank services in order to stimulate the
transactions and consumptions amidst people;
 On Addressing Illicit and Criminal Activities
2. Emphasizes ​the need to form a ​special committee ​which shall be called ​Cryptocurrency
Anti-Crimes Division (CAD) ​within the Financial Action Task Force ​under the
International Monetary Fund to investigate cases regarding crime and other illegal
activities in cryptocurrency and ensure the ​licenses and supervisions that should be
applied to cryptocurrency exchangers and mining sites,
a. In partnership with the International Police (INTERPOL), this committee will be
responsible for looking into cases regarding digital currency crimes;
b. These undercover agents may be permitted to commit minor illegal acts, to better
hide their purpose of spying. Criminals test people if they are willing to commit
minor offenses, and if the undercover cop refuses, that is a telltale sign that they
are working for the government;
c. Authorities will be allowed to perform secret online remote searches to enable the
authorities in validating financial reports;
d. The intelligence-sharing agreement framework between participating countries
will be used in tackling crypto criminality. The framework shall be pursuant to the
Right to Privacy under the United Nations General Assembly resolution(s);
e. The IMF suggests countries to abide by the ​Financial Action Task Force’s
recommendations and their anti-money laundering (AML) and countering
terrorism funding (CTF) regulations;
3. Enforces ​stricter oversight on taxation policy implementation. State authorities shall
impose taxation policies on cryptocurrency transactions by determining the procedural
basis which emphasizes stricter oversight;
4. Encourages ​countries to work with their enforcement officials and technical specialists by
creating platforms to leverage the support to anti-money laundering and anti-crypto-crime
platforms;
5. Requests ​countries to work on a collaboration in researching and allowing a specific type
of program to be implemented into the latest type of cryptocurrency. With the proper
programming done that allows blockchains to store additional data that allows
transactions to be more transparent especially starting with the government, a better
 transparency will also build trust amongst citizens that will reduce crime and the drop of
economic growths;
a. The use of smart contracts could be enabled to battle corruption and fraud,
transactions can be officially confirmed better with the use of smart contracts or
scheduled programs that will be seen through the blockchain easily but with
anonymity. This will be beneficial in fighting major financial crimes that
institutions, terrorists, and governments are known to do;

On Addressing Legalization and Regulation

6. Recognizes that cryptocurrency ultimately cannot be blocked as evidenced by the
continuous trading apparent with the trading volumes that exist in the banned countries;
and in stricter countries, investors and traders only have to change jurisdiction either by
physical migration or digital migration with the use of technology;
a. It is recommended to apply the solution made by the Liechtenstein government,
the Tokens and TT Service Providers Act, in policizing not only the use of
blockchain in cryptocurrency, but also in other future uses. This encompasses the
problem of the legal structure that does not adapt quite easily;
b. The Tokens and TT Service Providers Act is proposed to be adapted
internationally to also cover the problem of cryptocurrency users who use it for
ill-means changing jurisdiction;
7. Recommends the regulatory sandbox that helps reduce the possibility of illegal activities,
and ensures adherence to compliance requirements, especially with countries who have
an advanced position in technology and have the financial capability to do so;
a. This regulatory sandbox will be ​Decentralized and Indirect to keep the
decentralized nature of cryptocurrencies. In addition, “surrogate regulators” such
as bank and payment systems will be the ones that will be applying the policies
set by the governments and the IMF;
b. It should be recognized that it takes a while for the policies to catch up with the
legal aspects of cryptocurrency to catch up with the innovations of the modern
world;
 c. It is recommended that cryptocurrency be recognized as an intangible asset, to
create stringent legislations for the transactions in the cryptocurrency;
8. Encourages ​the publishing of new cryptocurrency that are considered as “stablecoins” to
reduce high volatility that cause the halving day with the help of the Crypto Economy
Organization (CEO) and regional central bank, also should be done by combining several
centralized systems by the government so that cryptocurrency can maintain the stable
value and function well as a store of value and as a unit of account;
9. Recommends ​that state authorities require cryptocurrency-based businesses to register for
a license to operate in the jurisdiction. Such legislations will allow the state to act in a
supervisory manner and have the authority to decide which parties are allowed to take
part in cryptocurrency trade and transactions;
a. State authorities shall screen and review the licensing regulation to help indicate
the loopholes that have a potential threat in the future;
10. Encourages state governments to ban certain parties from taking part in cryptocurrency
transactions if said parties do not abide by the current legislations in the jurisdiction;

On Addressing Cryptocurrency’s Scalability and Security

11. Recommends to apply industrial - based security standards for cryptocurrency platforms,
exchange sites, cryptocurrency ATMs, and any cryptocurrency related platform to
increase credibility as well as to minimize cryptocurrency problems to happen;
12. Emphasizes the need for all states to have cyber insurance schemes, as a repressive plan
to face cyber attacks;
a. Each Member State's willingness to provide protection for victims of cyber-attack
should be reaffirmed;
b. It is encouraged that states cooperate with international organizations to provide
cyber-insurance services;
c. Countries are encouraged to address issues regarding cyber-attack and impose fair
punishments for the cyber attack perpetrators;
13. Recommends the use of blockchain in ensuring security for cryptocurrency as it can
ensure that data is not tampered with by unauthorized parties, makes sure that the users
navigate through encrypted methods;
14. Improves ​coordination and cooperation with all parties concerned such as the
government, the private companies that are managing cryptocurrencies, and NGO to
build a transparent mutual evaluation by examining the current implemented regulation to
minimize security issues as well as forecasting future opportunities;
15. Recommends the use of Artificial Intelligence through fintech blockchain companies to
strengthen digital security and identify transactions that are suspicious in real-time and to
establish a guideline according to the potential yet as well as the risks;
16. Enforcing the ledger system as surveillance through cooperation with Distributed Ledger
Technology (DLT) and law enforcement agencies that collaborate with several
specialized firms such as Elliptic to provide blockchain analysis services as prevention to
fraudulent and force the user to be honest with all the transactions activity;

On Addressing the Possible Taxation

17. Recommends ​that national governments must make clear regulations of tax regulation so
that the government knows about the people who use cryptocurrency in their country and
know where transactions are going;
a. Governments are recommended to impose taxes on cryptocurrencies. The
government must also formulate solutions for the underprivileged citizens so they
are able to use cryptocurrency and there will be no social divide created;
18. Recommends​ using taxes in monitoring the illegal activities in cryptocurrency as well;
19. Encourages ​all countries to avoid double tax policy on the ownership of bitcoin as an
investment and as a currency itself, and encourages that cryptocurrency users only be
taxed once. The owner only needs to pay tax for the government one time when they
bought the currency and remove the exchange rate tax;

On Exploring Alternative Energy Sources

20. Recommends ​using alternative sources of energies, not just natural sources from nature,
but also mechanical ones. Such as:
a. Energy converted from bike transportation in Amsterdam and stationary bike
energy from India;
 b. Use renewable energy in the mining of Cryptocurrency, depending on the energy
availability in each country;
21. Recommends the usage of modern energy storage that saves up energy from both
reusable and alternative energy sources that are not used, that users can tap into when
they need it;
a. The usage of smart grids is recommended. These will regulate and monitor the
use of energy per household, having each device that is connected account for the
energy that it produces and consumes, which is also a great way to track illegal
activities;
b. Through campaigns, less energy-demanding hardware such as CPU and moving
on to electricity generated by solar, wind, or hydropower are recommended for
cryptocurrency mining;
22. Provides ​the international association of miners, to manage the amount of miners and
balancing the demand and supply of the cryptocurrency;
23. Integrates ​database of cryptocurrency users with bank and non-bank entities as
authorized financial institution in the country to reduce the use of resources;
24. Requests ​the report of countries with the highest amount of energy usage for
cryptocurrency mining to be submitted together with its plans and policies in reducing its
negative impacts to the environment;
a. Together with this, the carbon credit system will be introduced into crypto
currency mining;
b. The promotion of Renewable Energy Sources is suggested that can be done by
providing subsidies to countries who will be promoting it for cryptocurrency;
25. Stresses ​the use of Proof-of-Stake technology to mine rather than Proof-of-Work as it
saves the energy that would normally be used in the process of mining;
26. Recommends ​the cooperation with United Nations Environment Programme (UNEP) and
other International Non-Governmental Organizations (INGO) or local NGOs such as
International Solar Energy Society (ISES) or Greenpeace, and involving the private
sectors within states to contribute to the use of RES that has enormous potential for
improving the environmental industry and reducing the fossil-fuels consumption;
 On Recommendations for Non-Member States
27. Recommends ​the non member states to recognise the emergence of the cryptocurrency in
help combating use of this technology for solving any malicious crimes, fighting poverty,
and difficulty in transactions;
a. The non-member states are encouraged to look into digital currency’s potential as
the future of money which contributed much in complex aspects in transnational
economy transactions;
b. Non-member states are also encouraged to give importance to the usage of
cryptocurrency because it can be accessed anywhere as long as internet access is
present;
28. Encourages non-member states to apply the policies aforementioned and help in
regulating cryptocurrencies;

This draft resolution shall be effective 30 days after the committee session has elapsed. In
addition, the implementation of this shall be effective after all the sponsors and signatories have
signed and ratified the resolution.