The International Monetary Fund (IMF) has named the main dangers of an unregulated cryptocurrency market. According to the fund, if governments do not tighten oversight of bitcoin and other cryptocurrencies, then financial instability and fraud will increase, according to the Guardian.
The IMF said that the tenfold increase in the market value of cryptoassets to more than two trillion dollars since the beginning of 2020 requires more active government oversight. The IMF’s Global Financial Stability Report says that many new cryptocurrencies lack reliable risk management techniques. The authors mentioned cases of theft of client funds associated with hacker attacks. So far, the incidents have not had a significant impact on financial stability, however, as the popularity of cryptocurrencies grows, their impact on the economy will grow.
The IMF believes that some cryptocurrencies were created for speculation and fraud. In addition, the foundation highlighted the problems associated with the anonymity of crypto assets, which creates problems for regulators. Against this backdrop, the IMF sees the potential threat of money laundering and terrorist financing. In 2021, the market capitalization of stablecoins – cryptocurrencies that are pegged to regular currencies – quadrupled to $ 120 billion. In this regard, the fund noted the threat to the financial system.
Developing and emerging market countries are leading the way in the use of cryptocurrencies. According to the fund, this is fraught with risks to financial stability and effective monetary policy by central banks. At the same time, the countries adhere to different policies regarding the cryptocurrency market. While El Salvador recognizes bitcoin as an official means of payment, China completely bans all transactions related to cryptocurrencies, promising to take tough measures to suppress trade in them.