Crypto Can No Longer Exist Separately – IMF Says

January 27, 2022

The IMF (also known as The International Monetary Fund) recently noted that crypto can no longer exist in a vacuum. The organization issued a warning to governments around the world that the chance of possible “contamination risks” between crypto and equity markets is increasing.

IMF says that the interconnection between these 2 has reached a point where markets could become destabilized and jeopardized. 

Adrian Tobias, Tara Iyer, and Mahvash S. Qureshi are the economists that expressed concerns on the IMF’s blog, noting that the financial future could be in danger.

As we have noted, the risks of “contamination” Bitcoin can no longer be seen as a hedge against inflation. The same goes for other cryptocurrencies.

The connection between crypto and equity markets is not solely a case for the United States. Economists warn that the phenomenon will also affect developing countries in the world.

The following announcement comes during a period when a lot of countries are struggling to address the crypto industry. The emergence of stablecoins, DeFi, and NFTs has created numerous opportunities for people, but at the same time, they pose danger to traditional finances which should be taken into account, according to economists. 

While cryptocurrencies are important and they play a pivotal role in day-to-day transactions and operations, crypto-assets can no longer exist separately from the main financial institutions.

As the countries are moving forward, they should come up with new regulations and laws, noting how commercial banks can be exposed to crypto products and assets.

The IMF also reiterated its position, when El Salvador announced introducing Bitcoin as a legal tender in the country.

The economists also added to their blog, that cryptocurrencies soon could become detrimental in countries, where various cryptocurrencies are widely adopted.