IMF warns ‘cryptoization’ poses risk to global economy
Vulnerable to hacking, with a lack of transparency around issuance and distribution, and possible disruptions due to high volatility, cryptocurrencies, particularly stabelcoins, pose risks to the global economy. Such conclusions are contained in the IMF report.
ICYMI: We just released the October 2021 Global Financial Stability Report: COVID-19, #Crypto and #Climate: Navigating Challenging Transitions. Watch the press conference and read the report: https://t.co/c2FRKBTMz6 #GFSR https://t.co/LIqSnHdMrY— IMF (@IMFNews) October 12, 2021
According to the IMF, "losses as a result of such risks have not had a significant impact on financial stability, globally or domestically. However, as crypto assets grow, the macro-criticality of such risks is likely to increase."
Regulators in emerging markets should not lose control over cryptocurrencies, given the lack of a proper regulatory framework in most jurisdictions. The popularization of cryptocurrencies and stablecoins could disrupt their macroeconomic and financial stability, mentioned it the report.
"As the crypto ecosystem expands and evolves, new sources of risk will emerge such as stablecoins and decentralised finance," it said.
IMF experts also mentioned meme tokens, the dominance of Binance among centralized exchanges and Tether among stablecoins as factors for consideration.
The organization called for the development of "global standards for crypto assets."
"As the role of stablecoins grows, regulations should correspond to the risks they pose and the economic functions they perform. Emerging markets faced with cryptoization risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies," stated in the IMF report.
Earlier, in early October, the IMF said it was necessary to strengthen regulation of the cryptocurrency industry.