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The International Monetary Fund opined that risks and costs outweigh the potential benefits of digital assets. They can also be highly volatile, and thus their implementation as national currencies is not suitable for now.
Cryptocurrencies Are Not Related to The Real Economy
The International Monetary Fund (IMF) warned in a recent publishment that digital assets are not quite ready to be employed as national currencies. Despite highlighting their potential to provide faster and decentralized payments, they still have a long way until turning into stable payment options.
The IMF gave an example with Bitcoin – its price reached a peak of around $65,000 in April but crashed heavily shortly after. The institution pointed out that for the moment, the primary cryptocurrency can diversify investors’ portfolios and bring significant profits but can also cause huge losses.
Some countries around the globe are willing to grant legal tender status to BTC. In fact, El Salvador already achieved this goal, and the primary cryptocurrency became an official payment method there.
However, the IMF warned that BTC and the altcoins are not ready to qualify for that role yet. They are too volatile and “unrelated to the economy.” In fact, digital assets have a better chance to succeed in countries with shaky inflation and a shattered economy. Financially stable nations should stick to their national currencies – opined the IMF.
Subsequently, the institution alerted that criminals could potentially employ digital assets in their illegal operations:
“Without robust anti-money laundering and combating the financing of terrorism measures, cryptoassets can be used to launder ill-gotten money, fund terrorism, and evade taxes. This could pose risks to a country’s financial system, fiscal balance, and relationships with foreign countries and correspondent banks.”
Are Digital Currencies Real Money?
The debate whether Bitcoin and other cryptocurrencies are real money has been going on since the assets came into existence, with both sides having their strong proponents.
The International Monetary Fund joined the discussion and conducted a poll at the beginning of the year where it asked its Twitter followers whether they consider virtual currencies as indeed money.
The overwhelming majority – with 80% – answered “yes.” What’s even more impressive is the number of people who voted – over 90,000.