IMF reiterates more oversight for crypto in latest report on financial durability

IMF reiterates more oversight for crypto in latest report on financial durability

The IMF added that as the crypto space expanded and evolved, “new sources of risk” were emerging, such as stablecoins and decentralized finance, or DeFi. Specifically, the group identified the space at risk from hacking as having a “lack of transparency around issuance and distribution” of tokens, and operational risks including outages during periods of extreme volatility. It also labeled “meme tokens” and centralization — a major exchange like Binance handling a large amount of trading volume, while Tether is responsible for the majority of the supply of stablecoins — as factors to consider.

The International Monetary Fund’s Financial Stability Board referenced the rising reception of cryptocurrencies may presumably upgrade the dangers to the worldwide financial system. In its Global Financial Stability Report dispatched on Oct. 12, the International Monetary Fund, or IMF, said the reception of crypto possessions and stablecoins in rising business sectors and making economies may represent an issue to these countries’ macroeconomic and financial stability. The group referenced the perils have been “contained for the present,” but encouraged controllers to cryptocurrencies and keep up with them in test.

“So far, losses as a result of such risks have not had a significant impact on financial stability, globally or domestically,” said the IMF. “However, as crypto assets grow, the macro-criticality of such risks is likely to increase.”

Highlighting the risks of developing countries adopting digital assets is a common tagline for the IMF, with the group having previously reported on the challenges of central bank digital currencies and stablecoins. The group has warned both the Marshall Islands and El Salvador that recognizing a digital currency as legal tender could “raise risks to macroeconomic and financial stability as well as financial integrity.”

Earlier this month, the IMF released a set of policies for the emerging markets and developing economies to ensure financial stability amid global crypto adoption, given managing director Kristalina Georgieva’s claim that more than half of all central banks in the world are exploring how to launch digital currencies. Recommendations from the group included lawmakers “implement global standards for crypto assets and their ability to monitor the crypto ecosystem by addressing data gaps.”

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