Global financial regulators and the International Monetary Fund (IMF) on Thursday set out a road map to coordinate measures that stop crypto-assets from undermining macroeconomic and financial stability.
Such risks are exacerbated by noncompliance with existing laws in some instances, the G-20's risk watchdog, the Financial Stability Board, and the IMF said in a paper.
Many of the claimed benefits from crypto-assets, such as cheaper and faster cross-border payments and increased financial inclusion, have yet to materialize, it added.
"Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability," the paper said.
The paper sets out timelines for members of the IMF and G-20 to implement recent recommendations to regulate crypto from the Financial Stability Board and IOSCO, a global group of securities regulators.
It marks a further evolution in regulatory thinking after several years of seeing little threat from the sector, with attitudes hardening after the collapse of the crypto exchange FTX last November, which rattled markets and left investors nursing losses.
"A comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability," said the paper, which will be presented to G-20 leaders at a summit this month in New Delhi.
The European Union has approved the world's first comprehensive set of rules for crypto-assets, but there is a patchier approach elsewhere to a borderless sector where fraud and manipulation are "prevalent."
The paper said that other elements include governments avoiding large deficits, which can lead to inflation that dents fiat currencies and encourage substitutes such as crypto-assets.
The tax treatment of crypto-assets should also be spelled out, along with how existing laws apply to the sector.