The International Monetary Fund (IMF) has warned that banning cryptocurrencies cannot be ruled out if they become a threat to financial stability, particularly through the setting of slow regulatory action.

Kristalina Georgieva, the managing director of the IMF, recently spoke to Bloomberg about the need to regulate the world of digital money, stating that this is a top priority for the IMF, the Bank for International Settlements (BIS), and the Financial Stability Board (FSB).

She stated that the IMF, along with the above-named parties are “very much in favor of regulating the world of digital money,” however, she added that “if the regulation is slow to come and crypto assets become a higher risk for consumers and potentially for financial stability,” the option of an outright ban of crypto “should not be taken off the table.”

Georgieva cited India as an example of a country that explored the possibility of a crypto ban in the past. Additionally, there are 10 countries globally that have either soft or full bans on crypto. Those with absolute crypto bans include Qatar, Saudi Arabia, and China.

Countries with soft or implicit bans include Cameroon, Central African Republic, Gabon, Guyana, Lesotho, Libya, and Zimbabwe. While these bans from the 10 countries vary, the majority revolve around controlling the relationships between the banking sector and digital assets as well as consumer access.

While Georgieva said that bans should be considered, she did mention that it should be as a last resort and that if there is greater predictability and consumer protection in place, such measures will not be needed.

The IMF has previously stated that the regulation of cryptocurrencies should not be seen as stifling innovation but rather as building trust. In a paper released last year, the IMF emphasized the need to strike a balance between innovation and regulation to ensure that cryptocurrencies can contribute to the development of the financial sector while also mitigating risks to financial stability.

Even if a ban were to be considered, it would be quite difficult to impose in developed and democratic countries that have already begun to adopt the technology on a mass scale.

Generally speaking, the complete ban of crypto would be a near-impossible task, thanks to the decentralized nature of the technology. The assets can often be accessed anywhere in the world with an internet connection and mobile device, with geo-blocking being an ineffective tool thanks to VPNs that spoof the location of the user.

Should major exchanges be able to block consumers from creating accounts, they can simply revert to over-the-counter trades through peer-to-peer networks and decentralized applications — which make transactions even more difficult to trace.

History has shown that betting against or aiming to stifle innovation is always a losing position, and instead, countries that are interested in advancing their own well-being should look to align with the adoption of cryptocurrency and stay as true to its core principles as possible.

In related news, Australia is set to launch a CBDC pilot exploring a variety of asset tokenization use cases.