Before the corona crisis, the dividing line between the traditional financial markets and the crypto market in Asia was still quite clear, but now it is being softened more and more, which is why the International Monetary Fund (IMF) now recommends appropriate regulation.
In a blog entry from yesterday’s Sunday, the IMF economists warn of the current developments on the Asian market, because crypto is seemingly being integrated into the existing financial system at a rapid pace. According to the experts, this creates risks for financial stability. How to run in your writing:
“While the financial sector was affected by the sharp price movements [des Kryptomarkts] if it has been largely isolated so far, this could change in future price cycles. A domino effect could then spread through a large number of market participants who are invested in both traditional and crypto financial products.“
In this context, the authors refer to India, because here the correlation between Bitcoin (BTC) and the stock market has increased tenfold over the course of the pandemic.
The constant convergence between the crypto industry and the financial industry is primarily due to the fact that more and more crypto companies and crypto investment products are being accepted on the stock market and that more and more private investors and institutional investors in Asia are investing in cryptocurrencies.
Based on their spillover methodology, the IMF economists note that more and more capital is being tied up in the crypto sector in India, Vietnam and Thailand. For this reason, they advise Asian regulators to create “clear guidelines for regulated financial institutions”, to inform and protect private investors and to cooperate closely across national borders.
On July 27, Tobias Adrian, the IMF’s director of capital markets, had already warned that there could be other problematic stablecoins after TerraUST (UST). A “global regulatory approach” is needed to better protect investors.