The digital assets industry saw the second-biggest outflow of the year as investors siphoned around US$141 million (around Rs.1,109 billion) out of the industry last week following Terra’s recent crash. However, Kristalina Georgieva, the executive director of the International Monetary Fund (IMF), has urged members of the crypto community not to abandon these virtual assets just yet. Georgieva showed a soft approach to the crypto sector when speaking at the ongoing annual meeting of the World Economic Forum in Davos, Switzerland.
“I would ask you not to withdraw from the meaning of this world. It gives us all faster service, much lower costs and more inclusion,” Bloomberg quoted Georgieva as saying.
In a video clip the IMF official posted to her Twitter account, she can be heard stressing the need for global lawmakers to regulate the crypto sector and educate investors about the risks and benefits.
Central banks and financial services regulators have important responsibilities in regulating crypto assets.
Thanks very much @jchatterleyCNNSethaput Suthiwartnarueput, François Villeroy de Galhau and Axel Lehmann for a great discussion on central bank digital currencies. #WEF22 pic.twitter.com/rGyqooaaG8
— Kristalina Georgieva (@KGeorgieva) May 23, 2022
Terra’s demise earlier this month sent shockwaves through the virtual assets industry. The LUNA token, which has lost nearly 99 percent in value over the week, serves as Terra’s governance token.
Terra’s crash, which began two weeks ago, is largely attributed to the destabilization of the Terra USD (UST) peg to the dollar, leading to a mass conversion of UST to LUNA.
At its peak, Terra was the 8th largest crypto token with a market cap of around $25 billion (approximately Rs.1.93,150 billion). Its crash apparently threatened investor confidence even in solid projects.
However, Georgieva noted that virtual assets also vary in categorization and some assets are less prone to losses than others.
She said there’s also a difference between stablecoins that are backed by cash and other assets and those that rely on algorithms to maintain their value, like Terracoin.
“The less support there is, the more you should be willing to take the risk of this thing blowing up on you,” Georgieva added.
Her remarks, which appear to support regulation and education in the crypto industry, marked a fresh change of pace from the IMF’s otherwise dovish approach to the digital assets space.
The IMF has previously proposed El Salvador to remove Bitcoin from legal tender, citing financial repercussions.
The IMF Executive Director addressed a panel discussion with other guests including Francois Villeroy de Galhau, Governor of the Central Bank of France.
The French finance official had mixed opinions on crypto, saying that Terra’s crash has gained people’s trust in central banks as opposed to cryptocurrencies.
https://gadgets360.com/cryptocurrency/news/imf-kristalina-georgieva-people-not-abandon-crypto-terra-crash-3004689 IMF Managing Director Kristalina Georgieva Suggests People Not to Abandon Crypto After Brutal Terra Crash