The International monetary fund (IMF) has expressed in a recently released report that the rapid climb of Bitcoin and crypto might impact the international finance system.
The report entitled “World Economic Outlook: Challenges to Steady Growth” published by the International Monetary Fund read:
“Cybersecurity breaches and cyberattacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”
Rapid Growth, improving Regulation, Acknowledgement From Government Agencies
Despite the 80 % decline in the valuation of the crypto market, the industry has seen some of the most positive developments relating to the institutionalization, regulation, and development of cryptocurrencies as an rising asset category in the past 9 months.
Led by existing companies like Coinbase and Gemini, major financial institutions in the likes of New York Stock Exchange, Cboe, and Goldman Sachs have began to strengthen the infrastructure of the cryptocurrency market, permitting both high profile retail traders and institutional investors to allot massive amounts of cash in the asset category.
As the cryptocurrency sector continues to grow at an exponential rate, the International Monetary Fund emphasised that it might create vulnerabilities within the financial system. As a result of cryptocurrencies are considered various currencies with price, a growing range of hackers have began to target digital asset trading platforms with sophisticated tools and hacking strategies.
“Stealing cryptocurrencies is similar to stealing money, and exchanges will continue to be targeted by hacking attacks in the long-run. It's as vital to determine systems to deal with the aftermath of hacking attacks as integrating numerous ways to prevent hacking attacks,” Jeon Ha-jin, the chairman of South Korea Blockchain Association said.
In South Korea, the third largest cryptocurrency exchange market behind the United States and Japan, exchanges have begun to insure their funds through trusted insurance providers like Samsung to add an extra layer of security and investor protection.
Gemini, a leading cryptocurrency exchange in the United States alongside Coinbase, also recently obtained insurance services from Aon to ensure that in an unlikely event of a security breach, the exchange is able to hide user funds and holdings fully.
“Consumers are looking for the identical levels of insured protection they’re used to being afforded by traditional financial institutions. Educating our insurers not only allows United States to provide such protections to our customers, however it also sets the expectation for client protection across the crypto business,” Yusuf Hussain, Gemini’s Head of Risk, said.
The cryptocurrency industry and infrastructure employed by exchanges are comparatively new and fundamentally totally different from the technologies enforced by the traditional finance sector. As such, it's appropriate for the International Monetary Fund and government agencies to explain the rapid growth of the asset category a risk to global finance.
But, continuous efforts to strengthen the infrastructure of the cryptocurrency market and improve investor protection can cut back the danger cryptocurrencies have on the global finance industry.
Expert Believes it is Optimistic
Emin Gun Sirer, a professor at the distinguished Cornell University and a extremely regarded expert in the area of cryptocurrency and blockchain, expressed that the acknowledgement of cryptocurrencies as an asset class by the International Monetary Fund is optimistic for the industry.
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