The International Monetary fund (IMF) has published a new blog discussing the pitfalls of using digital assets as national currencies. Citing issues with their volatility, the institution said that the adoption of cryptocurrencies as legal tender is “inadvisable” at the moment. However, it asserts that the underlying technologies of virtual assets that power swift and cost-effective transactions should not be ignored.
The IMF acknowledged that there are many benefits to crypto-assets, but that they fell short in comparison with fiat currencies. Bitcoin, in particular, was mentioned several times by the institution and described as a highly volatile asset. Its steep decline from $65,000 in May was used by the IMF to explain the potential for huge profits as well as staggering losses.
Like other detractors of digital assets, the IMF highlighted the use of cryptos in money laundering, terrorism financing, and tax evasions. It also pointed to the carbon footprint of crypto mining activities and stated that the implications of making these assets legal would be dire for the world.
While the IMF maintains that virtual currencies are a risk to “macro-financial stability”, it agrees with their supporters on the benefits of the technology.