International Monetary Fund (IMF) deputy managing director Gita Gopinath has stated that crypto assets are risky and she has maintained her distance from the sector.
In an interview at the World Economic Forum’s Annual Meeting at Davos, Gopinath said, “I have completely stayed away from it [crypto]. But that’s just me and my level of risk aversion.
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The IMF official also pointed out the weakness that the “speculative” asset class has witnessed in the past weeks, highlighting it is not an ‘easy return’ market. She said, “It went from about a $3 trillion market to a $1.5 trillion market in about six months — very quick moves. It is not a very easy-return investment. So these are very large risks you are taking,”
That said, Gopinath is of the view that any risky asset class, like crypto, needs to be regulated.
Volatility not enough to shut out crypto
IMF managing director Kristalina Georgieva also reportedly said at the Summit that investors need to make informed decisions as the Terra-led collapse haunts the market. She commented, “The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face,”
Administrators and officials have called for immediate regulation of crypto assets after the Terra UST stablecoin de-peg led to a spiraling downward trend. At the time of press, the global cryptocurrency market cap stood close to $1.3 trillion on CoinGecko.
However, Georgieva maintained the view that not all virtual assets pose the same risks, and cannot be abandoned altogether. The chief of the international financial institution noted, “It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas.”
That said, Georgieva doesn’t think Bitcoin, despite being called a coin, can take the role of money as, “It’s not a stable store of value.”
Especially as BTC’s recovery has been short-lived. Bitcoin slid back down 3% below the crucial psychological level of $30,000 in the last 24 hours.
Owing to the volatility, François Villeroy de Galhau, a governor of the Central Bank of France, said that “citizens have lost trust in crypto.” CNN quoted Galhau adding, “Cryptocurrencies are not a reliable means of payment. Someone must be responsible for the value and it must be accepted universally as a means of exchange. It’s not,”
Despite the liquidity outflow, cryptocurrency advocates are notably attending the WEF meeting in large numbers this year. A free bitcoin pizza stall reportedly graced the initial days of the Summit, along with a “Liquidity Lounge.”
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