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Bitcoin’s price has recovered somewhat after falling below $20,000 per bitcoin last June, but it’s likely to drop at the end of last year as recession fears wreak havoc on the Federal Reserve’s outlook. Ethereum’s price has also bounced back from recent lows after Ethereum co-founder Vitalik Buterin released a surprise Ethereum price prediction.
Now, as the shockwave from the collapse of the terraUSD stablecoin and its supporting cryptocurrency Luna continues to be felt, the International Monetary Fund (IMF) warns that “there are other currencies that could fail.”
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“We could see further declines in both crypto and risk asset markets such as equities,” said Tobias Adrian, director of financial and capital markets at the IMF. Yahoo Finance in an interview. “Some coin offerings may fail more, especially some of the hardest-hit algorithmic stablecoins, some of which may fail.”
The failure of the Terra ecosystem has sparked intense regulatory scrutiny of the cryptocurrency market, U.S. securities regulators have intensified their pursuit of what they deem unregistered securities, and one top VC said, “This is in the face of the venture community. I predicted it would explode.” Billionaire investor Mark Cuban has warned that a nightmare awaits the cryptocurrency industry.
It appeared that Terra’s problems could extend to other stablecoins, including the two largest Tethers and USDC.
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Adrian said Tether, which is a mix of cash, money market funds, US Treasury bills, commercial paper, corporate bonds, loans and cryptocurrencies, is “vulnerable because it is not backed one-to-one.” rice field. In May, the issuer of Tether said the stablecoin was partially backed by “non-U.S.” government bonds.
“[Some fiat-backed stablecoins] It is certainly a vulnerability that some stablecoins are not fully backed by assets like cash,” Adrian added.
Last week, the IMF released a report detailing how the cryptocurrency crash “caused huge losses for crypto investment vehicles” and led to “algorithmic stablecoin failures.” The fund said it was confident of a “ripple” to the “broader financial system”. remain restricted.
“What was very concerning in the 2008 crisis was that banks were highly exposed to shadow banking, and at this time we do not see any exposure of banks to shadow banking through crypto.” said Adrian. Yahoo Finance.