In their recent World Economic Outlook, the International Monetary Fund (IMF) warned against some of the dangers of cryptocurrencies.
Of the key findings, “Cybersecurity breaches and cyber attacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”
The report focused on the top ranking coins only: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), EOS, Stellar (XLM), and Ripple (XRP). Additionally, as the IMF sees it, the lack of crypto regulation leads to a myriad of illegal activities.
Since its beginning, cryptocurrency has had a “black market” reputation
After all, one of the perks of crypto is that it’s anonymous. To some, that is scary. What really concerns the IMF is that some banks are beginning to take an interest in crypto and consider adopting it. Therefore, they think this could have an even greater impact. Attacks on big institutions could be devastating.
The IMF doesn’t want to damage cryptocurrency, but incorporate it safely
Previously, the IMF acknowledged some of the potential benefits of cryptocurrency and blockchain. However, they’re now concerned that problems will only become greater as popularity grows. Their aim is international regulation. They want to ensure only legal activity for investment and exchange.
Other prominent critics targeted these free-market aspects of cryptocurrency. In the last month, it was called both the “Wild West” and the “Stone Age”.
Not every investigative group is so worried
Global watchdog, the Financial Stability Board (FSB) recently stated that cryptocurrency is not a threat to financial stability. However, further research is necessary. Both the FSB and IMF take note of the intense speed of crypto development. The market is down 80% in 2018, after a rapid spike last year.
Meanwhile, many still believe that cryptocurrency can help banks, and is beneficial to cross-border exchange. To those in favor of cryptocurrency, government regulation threatens to undermine decentralization. However, regulation could establish more trust and attract bigger banks. Then again, it’s hard to say if if regulations will truly be effective, considering the essence of cryptocurrency.
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