An official from the International Monetary Fund (IMF) said on Monday that after the recent collapse of a popular stablecoin, people should not avoid the world of Bitcoin and altcoins completely. Here are the details…
IMF Chief: Do not leave the BTC and altcoin space
As we reported on Somanews, TerraUSD, or UST, exploded earlier this month, setting off a chain reaction that saw the total value of the cryptocurrency market drop by hundreds of billions of dollars. “I beg you to preserve your importance in this world,” said Kristalina Georgieva, IMF managing director, at the World Economic Forum’s annual meeting in Davos, and used the following statements:
He added that it is the responsibility of regulators around the world to place guards and provide education to protect investors. Georgieva noted that there are many different types of assets with varying levels of associated risks. For example, there is a big difference between stablecoins backed by cash and other assets, and those that rely on algorithms to maintain their value, like Terra’s UST. Stablecoins are a type of cryptocurrency that must maintain a 1-to-1 value to a reserve asset like the US dollar.
Georgieva: You have to be prepared
“The less backing there is, the more prepared you have to be to risk this thing popping in your face,” Georgieva said. But not all cryptocurrencies should be smeared with the same brush, she added. Georgieva was speaking with other members of the world’s financial elite at a panel discussing central bank cryptocurrencies.
The head of the Bank of France, Francois Villeroy de Galhau, dismissed concerns that central banks are slowly losing people’s trust as cryptocurrencies and decentralized finance grow in popularity. “My impression is that in recent weeks, citizens have lost more confidence in crypto than central banks,” Villeroy said, referring to Terra’s collapse. The crypto market has come under pressure since the collapse of Terra’s UST and LUNA, reducing investor confidence in the market.