The managing director of the International Monetary Fund (IMF) reportedly said that investors should not completely pull out of crypto after the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST).
IMF Chief Has a Message for Crypto Investors After the Collapse of LUNA, UST
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), discussed cryptocurrency at the World Economic Forum’s annual meeting in Davos Monday.
She urged people not to completely shun crypto after the recent collapse of algorithmic stablecoin terrausd (UST) and cryptocurrency terra (LUNA), Bloomberg reported. The IMF managing director was quoted as saying:
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.
The IMF chief stressed that it is the responsibility of regulators worldwide to put up protective measures and adequately educate investors on the risks of crypto assets.
She pointed out that there are many different types of crypto assets with varying risk levels, emphasizing that there’s a big difference between stablecoins that are backed by cash and algorithmic stablecoins, like LUNA.
The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face.
IMF Chief Says Stablecoins Not Backed by Assets Will Eventually Fall to Pieces
Georgieva further discussed stablecoins during a panel moderated by CNBC in Davos Monday. “When we look at stablecoins, this is the area where the big mess happened. If a stablecoin is backed with assets, one to one, it is stable,” she said, elaborating:
When it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid … What happens to pyramids? … They eventually fall to pieces.
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A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
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