The International Monetary Fund has raised concerns about the significant growth pace of cryptocurrencies and the lack of regulation. Data collected by the global financial institution shows that the total market value of crypto assets surpassed $2 trillion in September 2021. This illustrates a 10-fold jump from levels observed in 2020.
Evan Papageorgiou, a deputy division chief at IMF, told CNBC that the crypto market’s growth has definitely been no less than magnificent. But it has come because of a lack of strong operational governance. He believes the financial institutions and people trading cryptocurrencies lack risk practices and this puts consumers at risk.
The IMF highlighted inadequate disclosure and oversight in the crypto space. Moreover, it says digital assets create data gaps. This can lead to money laundering rackets and terrorist financing on a wide scale. The UK’s Financial Conduct Authority (FCA) has pointed out the link between social media and crypto investments. Charles Randell, the chair of FCA, in a speech in September said scammers routinely rope in social media influencers to promote and market new tokens. He highlighted that some coins simply do not exist at all.
Earlier this year celebrity Kim Kardashian, who has more than 200 million followers on Instagram advertised a crypto token “Ethereum Max” on her account. Randell described this token as a “speculative digital token” as it was just created by unknown persons.
Speaking to the Cambridge International Symposium on Economic Crime, the FCA chair said Kardashian’s ad may have been the financial promotion with the single biggest audience reach in history. Randell also said the Ethereum Max should not be mixed up for Ethereum (ETH) cryptocurrency. He drew attention to the unfamiliar nature of the new technology. He believes it may not end well.
Myron Jobson, a personal finance campaigner at Interactive Investor, believes celebrities promoting or marketing cryptocurrencies is “very harmful and dangerous to young people”. He said policymakers need to look into this. They should explain the risks associated with investing in cryptocurrencies, digital tokens, and so on.
