Crypto prices posing concerns to financial stability
Crypto assets such as Bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns.
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New Delhi: Crypto assets such as Bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns.
Given their relatively high volatility and valuations, cryptocurrencies' increased co-movement could soon pose risks to financial stability especially in countries with widespread crypto adoption, according to IMF research.
It is thus time to adopt a comprehensive, coordinated global regulatory framework to guide national regulation and supervision and mitigate the financial stability risks stemming from the crypto ecosystem.
Such a framework should encompass regulations tailored to the main uses of crypto assets and establish clear requirements on regulated financial institutions concerning their exposure to and engagement with these assets. Furthermore, to monitor and understand the rapid developments in the crypto ecosystem and the risks they create, data gaps created by the anonymity of such assets and limited global standards must be swiftly filled, IMF said.
