The International Monetary Fund (IMF) admonitions the connection between cryptocurrency and financial markets, which posits risks to the financial system, reports Outlook.
The international body presents a report saying, “digital assets no longer form the edge of the financial system. Eying on their high volatility & the enhancing association between cryptocurrencies, the stocks are seen to be at high risks with financial stability. The risk is prominent in nations following digital units.”
Statement from the IMF
IMF registered, “The relationship between crypto-assets and traditional holdings (such as stocks) has enhanced significantly. This seems to terminate the discerned risk, multiplicity benefits and boosts up the risk of infirmity across financial markets.”
“Cryptocurrency like Bitcoin (BTC-USD) has grown from an uncertain asset class with few users to an essential part of digital asset innovation. This growth seems to upend financial stability concerns.”
Before the pandemic, cryptocurrencies such as Bitcoin and Ethereum manifested negligible correlation with the major stock listing. Cryptocurrency has been expanding against risks and security against swings in alternate asset classes. Since the outbreak of the pandemic, crypto and stocks have traded vastly in tandem.
As per IMF, Bitcoin volatility unfolds the sixth of S&P 500 vivacity during the pandemic. IMF also reported around 1/10th of the variation in S&P 500 returns. The fund registered, “A sharp fall-down in Bitcoin prices can boost up investor risk detestation. This will give rise to a fall in investment in stock markets.”
Senator Cynthia Lummis (R-WY) – the most dominant bitcoin’s vocalist on Capitol Hill, is foreseen to instigate a bill on crypto regulation. The regulatory bill will be focused to combine digital assets into the financial system.
Her bill proposes the creation of a new crypto regulation under the combined jurisdiction of the CFTC and SEC. The bill will also guide on which assets belong in which asset class thereby bestowing a new set of rules on taxing crypto and defending consumers.
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Source: https://coingape.com/crypto-not-fringe-anymore-connection-to-stocks-might-comprise-risks-imf/