Three reasons the IMF is worried about cryptocurrencies

[MongiIG]

The International Monetary Fund is concerned about cryptocurrencies, particularly because the nascent market is growing at such a significant pace and regulation is not following suit.

The total market value of all crypto assets surpassed $2 trillion in September this year — representing a 10-fold jump from levels seen at the start of 2020, data collected by the IMF shows.

 

Evan Papageorgiou, a deputy division chief at the IMF, told CNBC in October that “the crypto ecosystem has grown significantly … The process shows remarkable resilience but there have also been some interesting stress tests.”

One of the problems that the IMF has highlighted is that many of the people and financial institutions trading these assets “lack strong operational, governance, and risk practices.”

As such, the Fund has said that consumers are at risk, adding that there is simply “inadequate disclosure and oversight” in this space. Furthermore, it believes crypto assets create some “data gaps” and “can open unwanted doors for money laundering, as well as terrorist financing.”

Other institutions have been calling for more action to make these investments safer. Cryptocurrencies can be a divisive topic, with some arguing that they are the future of money and others presenting more skeptical arguments about their risks.

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