The International Monetary Fund (IMF), warns that investors’ financial stability may be at risk due to the rapid growth in digital assets. The IMF advised that investors should exercise caution despite the rapid growth of crypto assets in the past few months. According to the leading monetary institution, investors could still be victims of several schemes. These could include scams involving crypto assets and abandoned projects, especially as the crypto space is still not properly regulated. The IMF issued the following official statement:
“Consumer protection risks remain substantial given limited or inadequate disclosure and oversight. For example, more than 16,000 tokens have been listed in various exchanges and around 9,000 exist today, while the rest have disappeared in some form.”
The IMF continued by noting that some of these projects were even created solely to draw in interest and funds. Upon realization of their objectives, they cease to exist, or the developers walk away from the project.
The IMF also believes that the fast rate of crypto adoption impedes a central bank’s ability to influence monetary policy.
“Cryptoization can reduce the ability of central banks to effectively implement monetary policy. It could also create financial stability risks, for example through funding and solvency risks arising from currency mismatches.”
According to the IMF, digital assets can facilitate tax evasion and decrease government profits earned from issuing currency.
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