The recent explosion of interest in crypto assets and the relentless surge in BTC’s value may contribute to a weakened global financial system overall, the IMF has suggested.
The Fund published a key report today, October 10, entitled the World Economic Outlook.
It said: “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.”
It is not the first time the IMF has warned about risks posed by BTC and cryptocurrencies.
The IMF’s stability report last week said: “Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing.
“Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors.
“These developments should act as a reminder that the financial system is permanently evolving, and regulators and supervisors must remain vigilant to this evolution and ready to act if needed.”
Traditional financial institutions, from the US’s Security and Exchange Commission to the UK’s Treasury Committee, are currently assessing whether bitcoin and other cryptocurrencies – including Ripple Lab’s XRP token, Ethereum, Litecoin, EOS and Stellar – could be integrated into existing systems.
The financial bodies are attempting to gauge how the digital assets could be used as investment tools and means to move money across borders more efficiently.
Regulators around the world are – with varying degrees of success – attempting to get to grips with the Bitcoin and Blockchain phenomenon.
Last month Treasury Committee Chair Nicky Morgan labelled the burgeoning world of cryptocurrency investment as a “wild west” industry.
The former Education Secretary suggested oversight of the industry be handed over to the UK’s main financial services industry, the Financial Services Authority.
Excitement fuelled by speculation and “hype” has caused BTC and other cryptocurrencies based on the Blockchain distributed ledger to rapidly surge and then plummet in value over the past year.
The digital assets are highly volatile and sometimes experience huge fluctuations in their price.
In December 2017 BTC’s price more than doubled – reaching record highs of £15,244 per coin, only to nosedive by 45 percent, and then rebound back to £11,000 in the space of a few hours.
At the time of writing, BTC is worth just under £5,000 (£4,970).
Blockchain, the technology behind Bitcoin, is a form of digital ledger technology based on the decentralised ideal of cryptocurrency.
The technology comprises a growing list of records – called blocks – which are linked using cryptography to create an almost incorruptible digital ledger of economic transactions.
Speaking exclusively to express.co.uk, Blockchain and cryptography expert Toni Nijm said: “What the internet did to data, Blockchain will do to assets.
“Every single thing that has assets or value transfer will be impacted in one way or another.”
Speaking about Ms Morgan’s comments and whether the UK Government would soon embrace the technology, he said: “I think a lot of them are under pressure now – I don’t see that they have much choice, to be honest.”