IMF blog highlights concerns about cryptocurrency

IMF blog highlights concerns about cryptocurrency

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Answer IMF blog highlights concerns about cryptocurrency

The International Monetary Fund has repeatedly warned of the risks posed by the cryptocurrency sector to the legacy financial system.

An IMF blog post outlines how it envisions how the collapse of cryptocurrencies could infect banks and other financial institutions.

The blog post begins with the following:

Cryptocurrencies have lost trillions of their market value.

At the height of the latest cryptocurrency bull market, the total cryptocurrency market cap was $2.8 trillion.

It is now at the level of just over a trillion dollars.

The new asset class is bound to see some ups and downs, especially given the lack of regulation in the sector.

Read:Cryptocurrency is officially legal in South Korea

The IMF blog post accused bitcoin of losing the money of three-quarters of the investors who bought it.

Bitcoin is certainly not a digital asset that can be turned to for quick profits.

Rather, it is an asset to be held for the long term, and retail investors better be aware of that.

If an investor has held bitcoins for the past few years, then surely his investment is greater than any other amount of cash I keep in any bank or savings account.

Until the last 10 years in traditional markets, it was usual to see four-year boom-bust cycles, which is pretty much what has been seen in cryptocurrencies in the last 14 years since their inception.

The massive printing of fiat currencies by central banks has propped up traditional markets, not allowing them to fall, and adding huge piles of debt on the shoulders of taxpayers who will one day have to bail out the banks.

The IMF authors highlight banks’ exposure to cryptocurrency and welcome the Basel recommendations that are now about to be voted on by the European Parliament.

As the proposal would require banks to hold reserves equal to more than 100% of any cryptocurrency-related exposure, this could have the effect of not wanting them to do business with any cryptocurrency firms.

Read:The trading volume reaches its lowest monthly levels with the fluctuation in the price of Bitcoin at the level of 20 thousand dollars

According to many analysts, for the next monetary system to survive, it must be completely decentralized, and run by code that cannot be tampered with, rather than by humans who can manipulate things for their own benefit.

The International Monetary Fund very likely disagrees with that.

Read also:

The company “Gemini” lays off 10% of its employees … is the declaration of bankruptcy next?

Bitcoin, after its recent moves, is overtaking the rise in Ethereum… details here

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