Some of the world’s leading financial institutions are making a grip of new crypto comments
- In a busy week for crypto news, some of the world’s largest financial institutions are speaking about the asset class
- The International Monetary Fund (IMF), European Central Bank (ECB) and the Federal Reserve are all commenting on the crypto market
- This news demonstrates a increasing global interest in regulating the cryptocurrency industry
It’s not a huge surprise the world’s largest financial institutions and regulators are turning toward the crypto industry right now. After a crypto-heavy 2021, just about everybody is familiar with the asset class. Or, at the very least, they’ve had to listen to a friend wax poetic about their meme coin portfolio. In this week of busy crypto news, large institutions are now laying out their own takes on the industry.
In Davos, Switzerland, participants at the 2022 World Economic Forum meeting are talking all things blockchain. One of the most powerful attendees — the IMF — is speaking on the recent volatility facing crypto projects. But, while the IMF’s representative says there’s a real industry sore spot in algorithmic stablecoins, the market isn’t worth abandoning completely.
IMF Managing Director Kristalina Georgieva made comments on unbacked stablecoins earlier this week; after the recent collapse of TerraUSD (UST-USD), these assets have been highly disputed. “The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face,” Georgieva said at the conference. However, she added that the industry at-large is well-meaning and innovative. “It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas.”
Crypto News: The Fed and ECB Release Crypto Reports
As the 2022 meeting in Davos continues, other institutions across the world are churning out more crypto news. In fact, two of the largest stories this week rest with the Federal Reserve and ECB.
ECB chatter revolves largely around the bank’s newest risk assessment of the crypto space. Specifically, the ECB report discusses the current risks of crypto investing. Risks range from increasing volatility to low market integrity, among other things. The report also cites an informational shortcoming and disagreements on regulation as points of concern. Essentially, until there’s a consensus on risk mitigation or more information about the market, ECB expects little risk softening.
This report comes out of the ECB camp just a day after the bank’s president, Christine Lagarde, made negative comments about crypto in an interview. Lagarde said the industry is worthless: “It is based on nothing, there is no underlying assets to act as an anchor of safety.”
Meanwhile, in the States, the Fed also recently released the results of its crypto survey of 11,000 Americans. The survey makes for an interesting snapshot of investor demographics. While the data shows “unbanked Americans” are buying more into crypto, it also demonstrates that the industry largely favors the affluent.
Specifically, the Fed survey reports that “13% of Americans using crypto for payments do not have bank accounts.” However, the survey also shows that the wealthy tend to favor crypto investing. The 11% of people holding crypto as an investment were disproportionately more wealthy than the 2% using it for transactions.
All of these stories factor into an ongoing conversation about regulating the crypto industry on a global scale. Just last week, G7 leaders came together to urge the Financial Stability Board (FSB) to advance crypto regulations.