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Tobias Adrian, director of monetary and capital markets for the International Monetary Fund (IMF), has warned in a recent interview with Yahoo! Finance that the cryptocurrency industry could potentially get worse.
Adrian believes that more cryptocurrency projects could fail in the future. It is worth noting that the current cryptocurrency crisis was largely triggered by the downfall of the TerraUSD (UST) algorithmic stablecoin that took the whole ecosystem down.
More vulnerable fiat-backed stablecoins are likely to see bank runs in the near future. He specifically mentioned Tether, the leading stablecoin issuer, as an example of such projects. That said, Adrian acknowledged that there were certain stablecoins that were less vulnerable to such crises.
Expecting a steeper sell-off
The IMF director is convinced that digital assets will see an even steeper sell-off if the U.S. economy enters a recession.
The central bank is widely expected to announce another massive rate hike later today in order to tame inflation.
Massachusetts Senator Elizbeth Warren recently criticized the U.S. Federal Reserve's aggressive monetary policy that could trigger a "devastating" recession. The Fed, however, is in the process of attempting to pull a "soft landing."
Focusing on "feasible" regulatory tasks
Speaking of regulation, Adrian believes that the focus is on bringing wallet providers and cryptocurrency exchanges into compliance since they serve as entry points for thousands of cryptocurrencies. At the same time, he admitted that regulating each individual token would be a herculean task given that there are tens of thousands of tokens in existence.