- IMF managing director pleads to not ban crypto after the recent debacle.
- The Chief has also expressed her concerns and has made suggestions to strengthen the stability of stablecoins.
The fall of Luna was one of its kind and shook the crypto space. Questions regarding the stability of stablecoins were raised and investors faced wild losses. The industry faced backlashes from all over.
The authorities are also aware of the scenario. Referring to the same, Kristalina Georgieva, the managing director of the International Monetary Fund said that investors should not start liquidating their assets after the historic collapse, Bloomberg reported.
Topics related to cryptocurrency were discussed at the annual meeting of the World Economic Forum in Davos Monday. During the session, Georgieva stated, “I would beg you not to pull out of the importance of this world…It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas.”
Recently, the SEC Commissioner, Hester Peirce expressed her concerns to CNBC regarding the authorities not supporting innovation within the crypto space. A similar concern has been raised by the IMF managing director. She said that the regulators should take initiatives to implement precautionary measures and educate investors on the risks involved in the crypto ecosystem.
In a panel discussion, Georgieva stressed on the importance of stablecoins being backed by assets. She explained that the latter will ensure the stability of the former, and stated, “When it is not backed with assets, but it is promised to deliver 20% return, it’s pyramid…What happens to pyramids?… They eventually fall to pieces.”
The managing director also explained that there is a significant difference between stablecoins that are backed by a legal tender and algorithmic stablecoins. She further stated, “The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face.”