In the final days of 2023, cryptocurrency investors have started to breathe easier after a tense last three months. Bitcoin, while trying to break through strong resistance levels at the opening of Asian markets, is now clearly moving upward. However, while this situation excites investors, it worries the International Monetary Fund (IMF).
It is known that financial authorities have used negative expressions about cryptocurrencies for years. Terms like bubble, scam, and trap have been used. But now, the terms they use to define cryptocurrencies are changing, and they are viewing them as a “risk” to the traditional financial structure. Compared to previous definitions, this almost seems like a compliment.
IMF Managing Director Kristalina Georgieva attended a cryptocurrency event in Seoul. In her opening speech, she stated that the high adoption of crypto assets could disrupt macro-financial stability. U.S. officials have suggested that this could potentially trigger a banking crisis, but this year, we have seen that banks can collapse on their own even without widespread adoption of cryptocurrencies.
The high adoption of crypto assets could affect the effectiveness of monetary policy transmission, capital flow management measures, and fiscal sustainability due to variability in tax collection. This concern involves a fundamental issue related to the democratization of monetary management. U.S. Senator Warren says that if cryptocurrencies continue to grow this way, the financial sanctions power, which is one of the biggest weapons of the U.S., could become ineffective.
Georgieva added that their goal is to create a more efficient, interoperable, and accessible financial system by avoiding crypto risks and benefiting from certain technologies. She noted that good regulations could encourage and guide innovation.