IMF Finally Admits Bitcoin Has Evolved Into An Integral Part Of The Digital Asset Revolution, But Highlights New Risks

The International Monetary Fund thinks Bitcoin and cryptocurrencies have come to the fore of financial markets. Read the full article by Aliyua Pokima “Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.”

The International Monetary Fund (IMF) is finally giving Bitcoin and cryptocurrency the recognition it deserves. The IMF acknowledged that Bitcoin is moving its way to the forefront of financial markets but also highlighted some risks involved with the asset class.

One thing that the IMF noted as an “unintended consequence” of the growth of the crypto market is that now it moves in correlation to the regular stock market. Before the covid pandemic, we saw the two markets moving independently from each other and now they are sort of in sync. The IMF’s basis for this comes from tracking the S&P 500 and the metrics for the emerging markets index.

“Our analysis suggests that crypto assets are no longer on the fringe of the financial system,” the IMF said. “Given their relatively high volatility and valuations, their increased co-movement could soon pose risks to financial stability especially in countries with widespread crypto adoption.”

The IMF also noted that a global framework would be the best solution for crypto going forward this way there is no overlapping, confusion, or red tape to go through on a country by country basis. CBDCs are also what they think will be a better option for regulated cross-border payments. The development of these CBDCs is still a little far out but some countries like China, the Bahamas, and Nigeria are piloting that process and look to be rolling out soon.