The longer it takes international regulators to develop a strategy for regulating cryptocurrency, the worse it will be.
The more fragmented regulation becomes, the more likely it is that it will be locked in at the national level, warned the IMF on Tuesday.
The global framework would "bring order to the markets, help instil consumer confidence, and define the boundaries of what is permissible."
According to Narain and Moretti, the lack of a coordinated global response to the crypto boom has resulted in a fragmented market.
Regulation at the national level leads to regulatory arbitrage as "crypto actors migrate to the friendliest jurisdictions with the least regulatory rigour."
The IMF has emphasised that a global response must be implemented as soon as possible to avoid national regulators becoming "locked into disparate regulatory frameworks."