IMF: Cryptocurrency Might Create New Vulnerabilities in International Financial System

15 October 2018, AtoZMarkets

The International Monetary Fund (IMF) has recently stated in a report that the rapid growth of cryptocurrency could have impact on the international finance system.

The IMF’s report entitled “World Economic Outlook: Challenges to Steady Growth” warned that as cryptocurrency keep to expand, the international financial system may witness new vulnerabilities.

“Cybersecurity breaches and cyber attacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”, read the report.

It is reported that major financial institutions such as NYSE, Cboe, and Goldman Sachs have recently started to strengthen the infrastructure of the cryptocurrency market, which allows high profile traders and investors at institutional levels to allocate large amounts of money in the asset class.

Financial experts explain that as the cryptocurrency sector continues to grow at an exponential rate, the IMF sees that it could create vulnerabilities in the financial system, as cryptocurrencies are considered alternative currencies with value, the thing that has drawn hackers’ attention to attack digital assets trading platforms, using advanced hacking methods.

In his turn, Jeon Ha-jin – the chairman of South Korea Blockchain Association commented saying “Stealing cryptocurrencies is similar to stealing cash, and exchanges will continue to be targeted by hacking attacks in the long-term. It is as important to establish systems to deal with the aftermath of hacking attacks as integrating various methods to prevent hacking attacks,”.

Third-Party Insurance Companies Needed Today

Media reports say that South Korean exchanges -being the third largest cryptocurrency exchange market after the U.S and Japan- have begun to insure their funds through credible insurance providers like Samsung to add an additional layer of security and investor protection.

Yusuf Hussain-  Head of Risk at Gemini, a leading cryptocurrency exchange in the US, said:

“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions. Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry,”, confirming that the company has recently obtained insurance services from Aon, to make sure it securely cover user funds and holdings.

In his turn, Emin Gun Sirer, a professor at the Cornell University and a prominent expert in the space of cryptocurrency and blockchain, pointed to that the acknowledgement of cryptocurrencies as an asset class by the IMF is an optimistic signal for the industry.

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