Yahoo Finance’s Jennifer Schonberger discusses increasing crypto trading risks in emerging markets, plus why cryptocurrencies are outperforming crypto companies.
Video Transcript
AKIKO FUJITA: Well, the International Monetary Fund is out with a new report on global financial stability revealing how crypto trading could affect the world’s economy. Yahoo Finance’s Jen Schonberger joins us with the very latest on that front. Jen, we just heard from the IMF earlier about the global economic outlook. What are they saying specifically about crypto?
JENNIFER SCHONBERGER: Good morning, Akiko. The IMF warning this morning in a brand new report on global financial stability that a spike in cryptocurrency trading in emerging markets could pose a risk to the global financial system. Now the IMF also saying that the war in Ukraine has revealed that there are risks to crypto payment systems as well.
The IMF saying in that report, quote, “Repercussions of the Russian invasion of Ukraine and ensuing sanctions continue to reverberate globally and will test the resilience of the financial system through various channels, including acceleration of cryptoization of emerging markets, direct and indirect exposures of banks and non-banks, and possible cyber-related events.”
Now we have seen an increase in the use of cryptocurrencies in emerging markets since the start of the pandemic. And the IMF has highlighted that trading volumes of crypto assets against some emerging market currencies have spiked since the West sanctioned Russia. Tether, of course, the largest stablecoin used to settle spot and derivative trades, has in particular seen a spike in trading volumes against emerging market currencies. That spike is particularly notable in Turkey, where exchange rate volatility has been high, and the overall use of crypto assets has gained traction over the past few years.
The IMF also warned that cryptocurrencies could be used to evade sanctions. US Treasury Secretary Janet Yellen has noted that as well, though she says that the Treasury Department has not seen any major evidence of crypto being used to evade those sanctions. Now, Akiko, the IMF recommends that policymakers come up with a global set of regulatory standards to govern digital assets to ensure to protect against these risks for the global financial system, noting that decentralized financial platforms, as well as fintech firms, need further oversight. Back to you.
BRIAN CHEUNG: Yahoo Finance’s Jennifer Schonberger, thanks so much. Let’s take a look at Bitcoin because there is a lot of movement happening in the crypto space. It’s trading above $41,000 right now. It was actually below 40,000 yesterday, a lot of movement in today.
But obviously, that’s because publicly traded crypto companies are facing greater losses than the actual digital assets, at least, is the observed trend as of late. You can see Coinbase up against Bitcoin right now, actually performing quite differently. So, you know, it’s not necessarily always the case that Bitcoin and Coinbase and all the other crypto adjacent stocks or assets are moving in lockstep, Akiko.
AKIKO FUJITA: Yeah, Coinbase one, Robinhood another one that we’re tracking as well. And you have to wonder how much of that is really about it moving in tandem with crypto, how much of it is about how those companies are performing on their balance sheet specifically. We’re also been watching some of the ETFs for– well, there’s …….
Source: https://finance.yahoo.com/video/crypto-imf-warns-cryptocurrency-trading-161337517.html