The International Monetary Fund (IMF)’s managing director has said that investors should not pull out of the cryptos completely because of the recent collapse of terra (LUNA) and stablecoin terraUSD (UST).
IMF Chief’s Positive Message about Cryptos after the Collapse of UST, LUNA
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), was one of the speakers at the recently concluded World Economic Forum in Davos in Switzerland, and she discussed cryptos.
She asked people not to fully turn down cryptos because of the recent happenings, especially the collapse of the cryptocurrency terra (LUNA) and stablecoin terraUSD (UST).
“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,” said Georgieva.
The IMF chief further stressed that the regulator has a responsibility to install protective measures and educate investors about the risks therein. She added that there are many cryptos that come with varying risk levels, highlighting the main differences between stablecoins that are backed by actual cash versus algorithmic stablecoins. When the backing is less, the risk involved is pretty high.
Georgieva went deeper into the stablecoins, and indicated that coins not backed by assets would eventually collapse. “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 pointed out. “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,” added the IMF chief.
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