Cryptocurrency offers a different approach to finances and money in general. Cryptocurrency might not be actual finances, but the tokens are able to fit all the features required of a good currency. Due to this, many people have started utilizing cryptocurrency as a form of currency. The number of countries regulating and legalizing cryptocurrency is enough proof that cryptocurrency will have huge impacts on finances in the future. Apart from activities carried out by governments around the world, the cryptocurrency adoption rate across the globe has been increasing at a high rate and causing a stir among people and organizations that control finances in the world.
One financial institutions has identified that cryptocurrency adoption and use is causing challenges for fiat currencies is the International Monetary Fund, or the IMF. IMF is an international organization that controls finances in the world. It ensures that all the governments in the world are able to develop and offer financial value to the rest of the world. Since this is the body that helps government finances in the world, it also has been researching and identifying some of the impacts cryptocurrency has had and will have on the entire world. Due to these reports, the IMF has come up with its opinions on what should be done to ensure financial security and wellbeing will be adopting cryptocurrency.
The first insight the IMF offered was on the rapid increase in crystallization in the world. According to the organization, there are two main factors that have and may have huge impacts on cryptocurrency adoption and use. The first is the pandemic, while the second is the war happening between Ukraine and Russia. The organization states these two are the main reason why the rate of cryptocurrency adoption has been increasing in the last few years, and the increase might disrupt the financial situation in the world.
The COVID-19 pandemic led to a situation where people did not make any income while inflation was increasing at the same time. The war on Russia has made people realize some of the hidden benefits of cryptocurrency. According to the IMF, the decentralized exchange used by cryptocurrency can be a good thing and a bad thing at the same time. It attracts some unwanted attention from people who do not have the best intention at heart. According to the IMF, cryptocurrency might be used by people, organizations, and countries to avoid sanctions. The best example of this is how people from Russia, including Russian oligarchs targeted by sanctions against the country, are using cryptocurrency to evade the sanctions.
Due to these issues, the IMF states that there is a lack of cryptocurrency governance, and this might have huge negative impacts on the rest of the world. If nothing is done, this might cause issues with the financial stability in the world and affect people and countries negatively. This is the reason why the IMF is proposing that countries coordinate and develop regulatory approaches that will be able to control cryptocurrency use. Some countries such as Belarus have already done this, but more could do the same and improve the situation before it gets worse.
