The regulatory entity paid particular attention to growing Tether (USDT) volumes. Bitcoin mining could get boosted by cheap energy sources.

The latest report on world financial stability of the International Monetary Fund (IMF), revealed this Tuesday, April 19, warned that bitcoin and other digital assets could serve as a method to avoid the punishments imposed on Russia after the deepening of the armed conflict between Russia and Ukraine.

The war in Ukraine according to the report, the war in Ukraine has unveiled some of the challenges regulators face in applying stricter punishments and capital flow management measures.

For example, implementing those controls requires other parties to confirm the identities of the transacting entities. However, using digital assets could allow users to avoid such policies through various methods.

One of these methods is the use of exchanges and other crypto services that do not comply with regulators’ policies. Poor implementation of due diligence methods by providers also appears in this scenario.

Finally, the use of technologies and networks that increase the anonymity of these financial operations, such as mixers, decentralized exchanges, and privacy-oriented currencies, hinders identifying those who use a particular deal.

According to the IMF, the Risks are there

According to the IMF, cryptocurrency trading volumes against other emerging market assets appeared suddenly since the start of the COVID outbreak.

Punished nations could also assign more resources to avoid these financial punishments through bitcoin mining. This action could allow countries to profit from energy resources, some of which cannot get exported due to sanctions.

In this sense, shortly before the start of the conflict, the Russian Ministry of Economics supported the allowance of mining in regions of that country where there is a surplus of electrical energy.

Monetization takes effect directly on blockchains and outside the financial system where sanctions are applied. Miners can also earn profits instantly from users who pay mining transaction fees (which in this case could get sanctioned governments),” the report states.

At this point, the IMF acknowledges that the share of mining in the countries under sanctions and the total size of mining revenues suggests that the magnitude of such flows got relatively contained. However, the risks of breaking the financial integrity remain untouched.

This situation does not prevent initiatives to increase the number of miners in areas where low-cost electricity is more common. Last year’s average monthly income of all bitcoin miners was at least $1.4 billion. Russian miners could have caught at least 11% of that total and Iranians 3%, roughly $196 million.

Although the IMF acknowledges how much the adoption of bitcoin in emerging markets has grown, this organization continues to reject that El Salvador has granted it the status of legal tender.

According to this economic entity, Bitcoin is now a legal currency in El Salvador, including severe risks to financial and market integrity, financial stability, and consumer protection.

By: Jenson Nuñez

The financial institution highlighted the risks of DeFi in terms of liquidity and security. He asked to regulate them but acknowledged that it is difficult since they are decentralized platforms.

The International Monetary Fund (IMF) ruled on decentralized finance protocols (DeFi) and highlighted the need to regulate this environment. The main struggle of these networks, according to the agency, is the lack of liquidity. In contrast, the lack of a centralized supervisory entity and various regulatory uncertainties mean that the traditional regulatory intention does not work in this space.

This IMF perspective on DeFi protocols, which are based on smart contracts to bring financial services such as loans and investments (among others) without intermediation, was revealed in the Global Financial Stability Report report.

The topic of DeFi appears in chapter 3 of the document, which got entitled The rapid growth of fintech: Vulnerabilities and challenges for financial stability.

The most prominent struggle about the IMF observing in DeFi gets linked to an inadequate framework for liquidity management, which gets brought by investors and could become scarce in stressful periods.

In addition, although it suggests regulating in this sector, the agency acknowledges that the lack of centralized entities that deal with DeFi represents an obstruction to its regulation and supervision.

The report expressed that these decentralized financial services networks should become subject to robust governance regimes. Government authorities might become responsible for granting this context and encourage public-private contributions to set up self-regulatory organizations.

Another previous publication on the blog of the financial institution also highlights that DeFi includes the accumulation of purchases and presents a particular sensitivity to the market, liquidity, and cybersecurity risks.

On this last point, the text warns that cyberattacks can become a fatal factor for these networks because they extract their currencies and decline their confidence.

The lack of a deposit guarantee in DeFi fuels the idea that all deposits are at risk; however, this is not the case because these protocols usually need the placement of crypto active as collateral, such as bitcoin or another cryptocurrency.

The Growth Moment of DeFi According to the IMF

To describe DeFi and the context they go through, the agency assured in its report that these platforms have had extraordinary growth and that although they increase efficiency and investment opportunities, “they pose market and security risks.”

According to IMF’s view, technology entities focused on finance started to occupy the field of traditional banks, and their regulation should focus on features that could enable the ecosystem of digital currencies.

The IMF and its Stance Regarding Bitcoin

It is not the first time that the International Monetary Fund has defended its stance regarding Bitcoin, cryptocurrencies, and technology. These demonstrations have always had the goal of discrediting or requesting more effective regulations in all these sectors.

The IMF asked Argentina to take “anti-Bitcoin” procedures to refinance the country’s debt with the entity. This request may happen again in the entity’s negotiations with other administrations.

By: Jenson Nuñez

As crypto scams keep increasing, 9% of existing cryptocurrencies have disappeared from the market.

Many investors play it safe and only trust relevant digital assets, such as Bitcoin, Ethereum, Litecoin, or Binance Coin; stable coins like Tether or USD Coin, there are even those users who bet on meme coins, like Dogecoin. But some are risky (or very naive), decide to invest in shady and unknown projects, and often end up losing everything.

According to CoinMarketCap reports, there are 18,990 registered digital assets, and many got already measured up, but others have not; they even turned out to be part of scam schemes.

According to Finbold’s report, fed with data registered by 99Bitcoins, 1,705 of these digital assets have “died”; they have vanished from the market. That is, 9% of the existing digital currencies failed.

Among the examples are some projects, such as the case of BitConnect (BCC). Many other projects got also mentioned, including VegasCoin (VEGCOIN), Storeum, (STO), 1coin (ONE), Adrenaline Coin (ADN), Agrolot (AGLT), Beatlecoin (BEA), Bitcoin Platinum (BTP), Bitcoin Token (BTK), CannabisCoin (CANN), Demoncoin (DMC), among others.

In the 99Bitcoins list, you can observe each of these failed projects and why they are no longer active in the market. Among them: missing website, inactive social networks, not listed on any exchange, or due to a stopped development.

Finbold highlights that the vast majority of inactive coins are digital tokens that turned out to be scam schemes, which got abandoned by their teams, lacked funds, or failed for some different reason, and are no longer enabled for users to get them. On rare occasions, some of these coins may come back to life and increase in value if they gain enough relevance.

BitConnect’s Case

One of these coins is BitConnect, as the team spent a lot of investment on marketing only to become a massive Ponzi scheme that gathered over $2 billion from victims.

In addition to the 1,700 names on the list, some showed potential for similar reasons; one of these coins is SafeMoon, which many experts warned was a coin.

Recently, its former head of marketing, Ben Philips, got caught up in a classic $12 million pump-and-dump scheme. He used his skills and influence over the environment to “inflate” the token price and got to negotiate it at inflated prices.

Another short-lived coin that caught many victims was the Squid Game (SQUID) cryptocurrency inspired by the famous Korean Netflix show The Squid Games, whose value went down to almost zero six months ago after the project disappeared from the network.

According to the SQUID’s CoinMarketCap page notification, the project is now apparently run by the community after developers pocketed millions. Some investors reported how they lost their investments and savings in this scam.

By: Jenson Nuñez