A recently published paper by the International Monetary Fund (IMF) has highlighted some of the issues surrounding the proof-of-stake (PoS) approach to blockchain infrastructure, while also proposing a regulatory framework to limit the global risks of digital assets. Proof-of-stake is a type of consensus mechanism used to validate cryptocurrency transactions. With this system, cryptocurrency owners can share their coins, giving them the right to verify new blocks of transactions and add them to the blockchain.
of the IMF Newly published paper It touches on how PoS, despite energy savings, “could create an excessive concentration of decision-making powers on crypto exchanges and wallet service providers, increasing risks to market integrity”. It also highlighted how proof-of-work mining requires significant energy, which could oppose “the global goal of transitioning to a low-carbon economy”.
The PoS model allows owners of cryptocurrencies to own coins and create their own validation nodes. Staking is when you pledge your coins to be used to verify transactions. Your coins are locked while you are staking them, but you can unstake them if you want to trade them.
When a block of transactions is ready to be processed, the cryptocurrency’s proof-of-stake protocol will select a validator node to review the block. A validator checks whether the transactions in the block are correct.
In terms of tech regulation in general, the paper says regulators should adopt a “technology-neutral approach” but “consider the regulatory implications of different types of technology” because “the variety of consensus mechanisms that blockchain inherently creates may create friction with broader policy goals and mandates.” Saying “the technology-neutral approach may not be sustainable going forward.”
Simultaneously, the IMF paper was published Another report To regulate stablecoins calls on the Financial Stability Board (FSB) to set up and lead a global effort on crypto regulation. The report published on Monday stated that the watchdog is “suited to coordinate and take the lead in establishing global standards to support national regulation of crypto assets,” as well as guide the national implementation of crypto asset regulation when considering the sector. – Specific standards.
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