The International Monetary Fund (IMF) is concerned about the global rise of cryptocurrencies, particularly because it is a new sector that is growing at such a rapid pace that it is difficult to keep up with.
Evan Papageorgiou, a Deputy Division Chief at the IMF, told CNBC that the crypto ecosystem has grown tremendously. He stated that the process exhibits a surprising strength and that stress testing was conducted along the route.
People and financial institutions trading on these cryptos, according to MF, lack strong operating and risk standards that would protect them from shock in the event of a disaster.
It claims that the greatest threat to crypto is a lack of proper transparency and leadership, as well as gaps for money laundering and terrorism financing.
Influencers and cryptocurrency
The Financial Conduct Authority (FCA) of the United Kingdom has issued a warning concerning the link between social media and cryptocurrency investment. Fraudsters utilize social media enthusiasts to help them pump and dump new tokens based on guesses, according to Charles Randell, Chairman of FCA. He claims that some influencers advocate fictitious coins.
Randell said:
“We haven’t seen what will happen over a full financial cycle. We simply don’t know when or how this story will end, but – as with any new speculation – it may not end well.”
Kim gets knocks
Kim Kardashian, an Instagram celebrity with over 200 million followers, was paid to promote a crypto asset on her account earlier this year. Analysts emphasized how little is known about Ethereummax’s owners, the cryptocurrency she supported. Other social media personalities with large numbers of followers, known as influencers, such as Tesla CEO, Elon Musk and Twitter founder, Jack Dorsey, have advertised crypto assets on their pages.
Jack Dorsey and rap musician Jay Z put $500 million into an endowment fund that was initially focused on Africa and India. The fund’s board of directors includes three Nigerians.
Standard Operating Procedure
Another source of concern is that young people are fascinated by the market and frequently make their first investments in cryptocurrency with the help of loans and credit cards. According to information released by the Financial Conduct Authority (FCA) in June, around 2.3 million people in the United Kingdom own cryptocurrencies. 14 percent of them buy them with cash, and 12 percent believe the FCA will safeguard them if something goes wrong. However, the FCA has stated that they will not be protected.