The president of the IMF fires red balls on crypto: “Stable crypto-currencies are a pyramid system”. | Christine Lagarde, IMF

The subject of crypto-currencies has been one of the most recurrent in recent days. More and more regulators, institutions and central banks are talking about these types of assets and the outlook is not as positive as expected. Recently, the President, Christine Lagarde, of the International Monetary Fund in a meeting held on Monday assured that stablecoins are a pyramid scheme.

She was referring to cryptocurrencies that are backed by stablecoins like the dollar and which, in theory, hold a value of 1 to 1 with the currency that backs them. To illustrate this situation, Christine Lagarde alluded to the impact generated by the collapse of Terra and Luna in recent days, which highlighted the apparent reality of stablecoins which occupy a very important place in the crypto market. -currencies, but also in the economic system.

The Terra recently lost parity with the US dollar. It’s a situation that started at the beginning of the year and caused Luna to fall to one of the lowest points that no one really expected. If it’s supposed to be a stablecoin, it should maintain parity with the currency it’s pegged to, which in this case was the dollar, but that didn’t happen.

Luna’s fall triggered one of the most severe falls the market has seen in recent months. During the cryptocurrency sell-off, the market lost hundreds of billions of dollars in market capitalization, leaving investors of different levels with significant losses.

For regulators, central banks and institutions related to the economy, this situation has highlighted the problems related to stablecoins, but also to the global market. That is why they are trying to take measures to stem the conflicts that the use of this type of cryptocurrency can generate among investors.

Cryptocurrencies under scrutiny

In the words of Christine Lagarde, when looking at stablecoins in a period of chaos like this, it is quite easy to see the reality of this asset class. This is what she said during a panel discussion at the World Economic Forum in Davos, where she explained that stablecoins are backed by a single asset and that if one promises a 20% return, it s is a pyramid.

In fact, this isn’t the first time something similar has been said about cryptocurrencies. The IMF chair’s comments come after the president of the European Central Bank gave a television interview last weekend, in which she claimed that cryptocurrencies had no value.

Along the same lines, the chief investment officer of Guggenheim Partners said bitcoin could fall further. If it is currently hovering around $30,000, he said it could soon be worth around $8,000, which would trigger a severe crisis in the market. Furthermore, he stated that most cryptocurrencies are nothing more than “junk“.

Also, the idea that stablecoins are a pyramid scheme is not far from the comments of Bill Ackman, who said that they are a crypto version of old schemes. He said that when he read about Terra it struck him as a pyramid cryptocurrency where investors are offered a 20% return which will be generated by demand and the momentum of new investors.

So far, the Terra issue has been one of the biggest shocks to the cryptocurrency market and made regulators turn their eyes to cryptocurrencies, but not in a positive way. Some market analysts are pretty sure that a total market crash is coming and if this is real the losses could be incalculable leaving the market in a pretty dark moment.

Other analysts say this is just a downturn and the market may soon recover as it has in the past. But the recovery will depend on a number of factors, one of the most important of which is the regulation of cryptocurrencies, which is shaping up to be a little stricter than what has been talked about in the past.

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