The committee highlighted the crypto industry as vulnerable to cyberattacks, a “lack of transparency around token issuance and distribution,” and potential losses such as downtime during periods of excessive volatility.
According to the Financial Stability Board of the International Monetary Fund, the rapid usage of digital currencies could possibly raise the risk to the global market. The International Monetary Fund, or IMF, stated in its Global Financial Stability Report released on Oct. 12 that the proliferation of digital currencies and stablecoins in emerging and developing economies could represent a barrier to such countries’ macroeconomic policy stability.
The IMF’s typical motto is “highlighting the risks of poor countries adopting digital assets,” and the organization has already reported on the issues of central bank digital currencies and stablecoins. Both the Pacific Islands and El Salvador have been warned by the institution that recognizing a digital currency as legal money might have serious consequences, adding, “raise risks to macroeconomic and financial stability as well as financial integrity.”
Given chief executive Kristalina Georgieva’s claim that more than half of all the central banks around the world were investigating how to launch cryptos, the IMF released a policy platform for developing markets and growing economies earlier this month to ensure monetary sustainability amid global crypto adaptation.
The IMF said that as the blockchain ecosystem developed and changed, “new sources of risk” such as stablecoins and decentralized finance, or Defi, were emerging. The group specifically selected the space that was vulnerable to hacking,
The committee specifically included “meme tokens” and centralization as factors to consider, with such a major exchange like Binance handling a huge amount of trading activity and Tether accounting for the bulk of stablecoin supply.