IMF Chair Kristalina Georgieva thought that all digital currencies are not the same, hence, crypto investors should not pull out from the innovation the world is enjoying.
During the World Economic Forum’s annual meeting on Tuesday, International Monetary Fund (IMF) Chair Kristalina Georgieva stated that the failure of Terra’s algorithmic stablecoin UST should not cause people to abandon cryptocurrencies. Kristalina Georgieva believes the cryptocurrency market is important because it provides faster service, lower costs, and greater inclusion.
Kristalina Georgieva, speaking at the World Economic Forum’s annual meeting in Davos, urged investors not to abandon the crypto market despite the collapse of Terra’s UST and LUNA, as not all digital currencies are the same, according to Bloomberg.
According to Kristalina Georgieva of the IMF, every investment asset, including cryptocurrencies, carries some level of risk. As a result, stablecoins backed by cash and other assets differ from stablecoins backed by algorithms. Stablecoins are coins that are supposed to be pegged to reserve assets such as the US dollar at a 1:1 ratio.
The demise of the algorithmic stablecoin TerraUSD, or UST, triggered a massive liquidation of the crypto market. This should serve as a warning to investors to avoid such risks, unbacked assets. As a result, investors should keep investing in digital currencies.
Kristalina Georgieva also calls on global regulators to protect investors through crypto regulations and education. Furthermore, she cautioned against conflating digital assets with currencies. Anything that is not backed by a sovereign guarantee can be classified as an asset class, but not as a currency.
Crypto Market Remains Under Pressure
Since the collapse of Terra’s UST and LUNA, the crypto market has been under pressure, reducing investors’ trust in the market. For the last two weeks, top coins like Bitcoin and Ethereum have been trading in a range. Bitcoin and Ethereum are struggling to keep their prices above $30,000 and $2000, respectively.