The value of numerous coins on the global cryptocurrency market is rapidly declining, and the International Monetary Fund (IMF) has issued a warning that things could become worse since more coins may fail or experience sell-offs. In an interview with Yahoo Finance on Wednesday, Tobias Adrian, the director of Monetary and Capital Markets for the IMF, issued a warning about increased market selling pressure and failed cryptocurrency tokens.
Adrian said in his interview: We could see further selloffs, both in crypto assets and in risky asset markets, like equities.
He continued: There could be further failures of some of the coin offerings—in particular, some of the algorithmic stablecoins that have been hit the hardest, and there are others that could fail.
The IMF chief anticipates that, as a result of the recession, cryptocurrency will fall much further.
Gary Gensler, the chairman of the U.S. Securities and Exchange Commission, warned that many cryptocurrency tokens will inevitably fail after the collapse of the cryptocurrency Terra and stablecoin TerraUSD in May. The executive expressed concern about the possibility of runs on fiat-backed stablecoins, a concern shared by Treasury Secretary Janet Yellen and the Federal Reserve. Adrian specifically mentions Tether and emphasizes,
There’s some vulnerability there because they’re not backed one to one.
Stablecoins are “backed by rather risky assets,” he continues. Director Adrian agreed that measures to safeguard investors and the financial system were urgently needed, in large part because there are so many cryptocurrencies available.
Regulating the coins themselves is going to be difficult, but regulating the entry points such as exchanges and wallet providers to invest in those coins, that’s something that is very concrete and very feasible.
In a statement earlier this week, the IMF claimed that as American inflation rates rise, overall economic stability is deteriorating. They continued by saying that while issues like inflation and recession represent significant hazards to the larger financial system, cryptocurrencies, particularly Bitcoin, do not actually benefit the market.
Image Credit: Shutterstock
Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.
