Director of the International Monetary Fund, (IMF), has warned that there could be more sell-offs in crypto assets and equities. He also warned that there could be more failures of crypto tokens.
In an interview with Yahoo Finance Wednesday, Tobias Adrian (director of Monetary and Capital Markets at the International Monetary Fund) warned about increased selling pressure and more failures in the crypto market.
There could be more selloffs in crypto assets as well as in risky asset markets like equities.
He stated that there could be more failures in some coin offerings, including some of the algorithmic stabilitycoins that were most severely hit, as well as others that could fail. According to the IMF director, crypto could also drop further in a recession.
May saw the implosion of cryptocurrency terra (LUNA), and stablecoin terreusd (UST). This prompted Gary Gensler, Chairman of SEC, to warn that many crypto tokens would fail.
Adrian warned of the possibility that fiat-backed stablecoins could experience runs. This is something Janet Yellen, Treasury Secretary, and the Federal Reserve also cautioned.
The IMF executive spoke out about tether ( USDT) and stressed that it was “vulnerable because they aren’t backed one-to-one.”
Adrian doesn’t see an immediate threat comparable to the 2008 financial crisis.
The 2008 crisis highlighted the concern that banks were exposed to shadow banks. We don’t currently see banks being exposed to shadow banks via crypto.
The IMF director also noted that regulations were necessary to protect investors as well as the financial system. Adrian commented on the number of cryptocurrencies that exist.
While it is difficult to regulate coins as such, regulation of entry points like wallet providers and exchanges to invest in them is concrete and possible.
The IMF published a Tuesday report that stated: “Crypto assets experienced a dramatic sale-off that led to large losses for crypto investment vehicles, and caused the failure algorithmic stablecoins as well as crypto hedge funds. However, spillovers to broader financial systems have been limited.”