The International Monetary Fund (IMF) in its latest report has stated that the sudden growth of Bitcoin and crypto could affect the international finance system.
The report called “World Economic Outlook: Challenges to Steady Growth” released by the IMF stated:
“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. The continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”
In spite of the 80 percent drop in the valuation of the crypto market, the industry has experienced some of the most positive growth in connection to institutionalization, regulation, and development of cryptocurrencies as a developing asset class in the last nine months.
Headed by prevailing firms such as Coinbase and Gemini, leading financial institutions, the likes of NYSE, Cboe, and Goldman Sachs have begun to strengthen the infrastructure of the cryptocurrency market, permitting both high profile retail traders and institutional investors to allocate large amounts of money in the asset class.
As the cryptocurrency sector grows significantly, the IMF stressed that it could establish vulnerabilities in the financial system. Due to the fact that cryptocurrencies are regarded as alternative currencies with value, an increasing number of fraudsters have begun to aim digital asset trading platforms with sophisticated tools and hacking methods.
“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,” Jeon Ha-jin, the chairman of South Korea Blockchain Association noted.
In South Korea, which is the third largest cryptocurrency exchange market behind the US and Japan, exchanges have started to ensure their funds through trusted insurance providers such as Samsung to add more layers of security and investor protection.
Gemini a major cryptocurrency exchange in the US together with Coinbase, recently got insurance services from Aon to make it possible that in a questionable occurrence of a security breach, the exchange is able to cover user funds and holdings fully.
“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,” Yusuf Hussain, Gemini’s Head of Risk, said.