The IMF Director is confident about the future problems of algorithmic and non-cash stablecoins
The Director of Capital Markets of the International Monetary Fund (IMF) believes that in the conditions of the ongoing crypto winter, further failures of "coin offerings", including algorithmic stablecoins, are possible.
In an interview with Yahoo Finance on Wednesday, Tobias Adrian, director of monetary and capital markets at the IMF, said that further failures of some coin offerings, in particular algorithmic stablecoins, are possible.:
"We may see further sell-offs of both crypto assets and risky asset markets such as stocks... there may be further failures of some coin offerings - in particular, some algorithmic stablecoins that have suffered the most, and there are others that may fail."
The IMF director also noted that he has seen "some vulnerabilities" for some fiat-backed stablecoins, referring to Tether (USDT), which he claims is not "secured one-to-one" with the US dollar.
Adrian also mentioned that stablecoins need a "global regulatory approach" to better protect investors. Adrian stated that while it will be difficult to assess whether each cryptocurrency is a security or not, regulators should primarily focus on ensuring that crypto exchanges and wallet providers exercise due diligence on coins before selling them.
TerraUSD (UST), now known as TerraUSD Classic (USTC), is the most notable algorithmic stable coin that has lost its price peg, which wiped out $40 billion of market value in May and is currently valued at $0.04.
The algorithmic stable coin Tron USDD also fell to $0.91 in June. However, it regained its price peg after $700 million in coins (USDC) was added to its reserves.
The Deus Finance DEI stablecoin also collapsed in May and is currently worth $0.18.
Earlier this month, Sam Kazemian, founder of Frax Finance, the company behind the FRAX stable coin, said that, in his opinion, purely algorithmic stable coins "just don't work."
Instead, Kazemyan stated that "decentralized stable coins in the network [...] must have [traditional] security."
https://coin-signal.com/cryptonews/the-imf-director-is-confident-about-the-future-problems-of-algorithmic-and-non-cash-stablecoins/
#Algorithmic, #Confident, #Crypto, #Cryptonews, #Director, #Future, #Imf, #Law, #NonCash, #PATTERN, #Problems, #Stablecoins
#CryptoNews, #LawCrypto