The managing director of the International Monetary Fund (IMF) reportedly said that investors should not completely pull out of crypto after the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST).
IMF chief has message for crypto investors after LUNA collapse, UST
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), discussed cryptocurrency at the annual meeting of the World Economic Forum in Davos on Monday.
She urged people not to completely shun crypto after the recent collapse of algorithmic stablecoin terrausd (UST) and cryptocurrency terra (LUNA), Bloomberg reported. The IMF managing director was quoted as saying:
I beg you not to withdraw from the importance of this world… It gives us all faster service, much lower costs and more inclusion, but only if we separate the apples from the oranges and bananas.
The IMF chief stressed that it is the responsibility of regulators worldwide to put up protective measures and adequately educate investors on the risks of crypto assets.
She pointed out that there are many different types of crypto assets with varying levels of risk, pointing out that there is a big difference between cash-backed stablecoins and algorithmic stablecoins, like LUNA.
Georgieva opined:
The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face.
IMF chief says non-asset-backed stablecoins will eventually fall apart
Georgieva then discussed stablecoins during a CNBC-hosted panel in Davos on Monday. “When we look at stablecoins, that’s where the big mess happened. If a stablecoin is backed by assets, one by one, it’s stable,” she said, elaborating:
When it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid … What happens to pyramids? … They eventually fall to pieces.
