Andorra received IMF guidance on recording and tracking Bitcoin transactions on March 13, following an official request for technical assistance from the European nation.
IMF’s Charge to Andorra on Bitcoin Transactions
In September 2023, the IMF conducted a technical assistance (TA) visit to Andorra – a country bordering France and Spain.
The visit sought to improve the nation’s balance of payments data. The key parameter involved recording economic interactions between residents and non-residents.
Andorra is known for its tax haven and ski resorts. Regardless, the country is facing challenges on several fronts. One of the many issues is its inability to record and track crypto transactions.
To get ahead of the issue, the Andorran Financial Authority (AFA) directed banks to apply for authorization to track Bitcoin and other crypto transactions. The country’s financial watchdog informed the IMF that no banks had taken the step to obtain permission, however.
Meanwhile, the IMF delegation reportedly explained the latest crypto-assets guidelines and the possible evolution of the next generation of international standards.
In this light, the IMF has charged Andorra to track Bitcoin and other crypto transactions, suggesting that the AFA regulate crypto asset holdings and transactions until September 2024.
Andorra has tried to take steps towards crypto adoption in the past. But, this guidance from the IMF would enable the country to generate data that will be useful in compiling its macroeconomic statistics.
IMF’s Advice to Andorra, PICs’ on Digital Assets
Many small countries are enthusiastic about joining the wave of mainstream digital assets by implementing Central Bank Digital Currencies (CBDCs). The IMF has particularly advised Pacific Island Countries (PICs) to delay such plans, however.
In its recent study, the IMF stated that many island countries are not ready to adopt this technology. The body also advised methodical approaches that are deliberate and gradual in implementation.
As in the case of Andorra, many small countries are still grappling with standard procedures related to digital assets and crypto transactions. Therefore, this would hamper the full-fledged adoption of digital assets if left unattended.
The February 2024 IMF report stated that specific currency demands could be shored up and assisted by digital currencies. This result holds for PICs, which are remote markets due to their size and population diversity.
Meanwhile, a user on X (formerly Twitter) alluded that the report stemmed from the IMF’s conference on the island nation of Fiji in 2023.
It’s great to see the fruits of last year’s IMF Conference in Fiji 🇫🇯
The departmental paper, “Rise of Digital Money: Implications for Pacific Island Countries,” delves into the fast-evolving landscape of digital money in a diverse region of extremes in size, remoteness and… pic.twitter.com/z4c8qrHB4S
— Jay Hunter Anson (@JHX_1138) February 27, 2024
The user recommended that well-designed digital assets can accelerate public policy goals in PICs.
Let’s summarize.
<<Digital money, if well designed and governed, has the potential to enhance pursuit of public policy objectives>>
<<Ill-prepared adoption of digital money may bring multiple and acute risks for PICs. Ill-prepared introduction of digital money may result in…
— Fred Johnston (@JohnstonFredJ) March 4, 2024
A reply to the tweet suggested that Bitcoin can fix recommendations specifying that unbacked crypto assets shouldn’t be officially supported.