The IMF has kept close tabs on various cryptocurrencies for some time now. Numerous warnings regarding Bitcoin and altcoins have been issued in recent years. In a surprising turn of events, the organization now focuses its attention on stablecoins. These digital assets gain a lot of popularity, yet the IMF is concerned they will pose risks quite similar to the likes of Bitcoin. Criminals will always find a way to exploit any industry, and stablecoins will be no different.
Replacing Banks is Plausible
In virtually all cases, a stablecoin will represent a digital version of the fiat currency it is linked to. This form of digitization can’t come soon enough, as our society focuses on digital goods and services more than ever before. Digitized finance seems to be the next logical step in the evolution, albeit it may take a while before it truly materializes. This aspect also poses significant problems and concerns for both central banks and normal banks, as they risk being replaced by stablecoins. While it may not happen in the next few years, this is a concept well worth keeping an eye on.
Tech Giants are Problematic
Ever since Facebook indicated it would create its own digital currency, the debate regarding the involvement of tech companies in finance has been rekindled. The social media giant isn’t the first tech company to explore this option, however. In recent memory, Telegram and LINE also unveiled a similar approach which could put some strain on monetary sovereignty in certain regions. However, none of these currencies will be stablecoins. That doesn’t mean tech giants can’t collude to block out competitors in the future, which is a worrisome aspect to be aware of at all times.
Forcing out Weak Currencies
Given the financial struggles in the form of inflation plaguing a lot of countries, their own currencies may be on the bubble. If stablecoins continue to rise in popularity, there is no guarantee these weak currencies won’t be replaced sooner or later. The IMF is very concerned regarding this particular aspect. Undermining of monetary policy should never be overlooked, as it is something that can happen fairly quickly. Venezuela would be an interesting market in this regard, as its financial infrastructure is pretty much in shambles at this point
As is always the case where money is concerned, there will be those with nefarious intentions looking to take advantage of the current system and technology. Stablecoins will not escape this gravitational pull, in the eyes of the IMF. Money laundering and terrorist financing through stablecoins are two very prominent threats which need to be taken care of as early as possible. Anyone issuing or controlling the supply of a digitized currency will need to take the necessary precautions to ensure such activities cannot take place. This particular aspect could even lead to further regulatory measures imposed upon stablecoins specifically.