The managing director of the International Monetary Fund (IMF),
Kristalina Georgieva has urged people not to completely shun crypto after the recent collapse of algorithmic stablecoin terrausd (UST) and cryptocurrency terra (LUNA).
Georgieva was discussing cryptocurrency at the World Economic Forum’s annual meeting in Davos on Monday.
“I would beg you not to pull out of the importance of this world … It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas,” Georgieva said.
The IMF chief then charged regulators worldwide to put up protective measures and adequately educate investors on the risks of crypto assets.
She pointed out that there are many different types of crypto assets with varying risk levels, emphasizing that there’s a big difference between stablecoins that are backed by cash and algorithmic stablecoins, like LUNA.
“When we look at stablecoins, this is the area where the big mess happened. If a stablecoin is backed with assets, one to one, it is stable,” she said.
Georgieva elaborated further: ” when it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid … What happens to pyramids? … They eventually fall to pieces.
