• The IMF highlighted was that many of the firms trading these assets "lack strong operational, governance, and risk standards," as one of the problems.
• The Fund has said that consumers are at risk.
• In addition, crypto assets "may open unwanted doors for money laundering and terrorist financing," according to the Fund.

The International Monetary Fund is concerned about cryptocurrencies, particularly because the embryonic market is growing at such a rapid rate while regulation is lagging behind.

In September of this year, the entire market value of all crypto assets surpassed $2 trillion, representing a 10-fold increase from levels recorded at the beginning of 2020, data collected by the IMF shows.

"The crypto ecosystem has grown tremendously," said Evan Papageorgiou, a deputy division chief at the IMF, to CNBC in October. The technique has proven to be extremely resilient, but there have been some interesting stress testing."

One of the issues raised by the IMF is that many individuals and financial institutions trading these assets "lack good operational, governance, and risk standards."

As a result, the Fund believes that consumers are at danger, citing "inadequate transparency and oversight" in this area. It also fears that crypto assets generate "data gaps" and "may open unwelcome avenues for money laundering and terrorism financing."

Other institutions have called for additional action to ensure the safety of these assets. Cryptocurrencies may be a contentious topic, with some believing that they are the future of money and others expressing concerns about their risks.

Influencers in the cryptocurrency world

The Financial Conduct Authority (FCA) of the United Kingdom has issued a warning concerning the link between social media and cryptocurrency investments.

"Scammers often pay social media influencers to assist them pump and dump new tokens based on pure guesswork." In a speech in September, Charles Randell, chair of the FCA, stated that "some influencers promote coins that turn out to simply not exist at all."

"We haven't seen what will happen across a complete financial cycle," he added, citing the technology's newness. We simply don't know when or how this narrative will conclude, but it may not end well, as with any fresh hypothesis."

Kim Kardashian, who has over 200 million Instagram followers, was paid early this year to promote a crypto coin on her account. Critics remarked on how little was known about the creators of ethereum max, the money she promoted. "This is not financial advise; instead, I'm sharing what my friends told me about the Ethereum Max Token!" Kardashian wrote in her post. She included a variety of hashtags, including #ad, which is necessary to indicate that her post is sponsored.

Influencers, or people with a large number of followers on social media, have also promoted crypto assets on their accounts.

In October, Myron Jobson, a personal finance advocate at Interactive Investor, said, "Cryptocurrencies are often advertised next to these posts showcasing this glossy lifestyle, and I believe the association is incredibly hazardous and damaging to young people."

Standardization

He believes that governments should examine cryptocurrency advertising and ensure that people are aware of the hazards connected with investing in such a volatile asset. Even within a single trading day, prices might change dramatically.

Another difficulty for policymakers is that young people are particularly interested in this sector and frequently use loans and credit cards to make their first ever investments in cryptocurrency.

Data published by the Financial Conduct Authority in June, around 2.3 million people in the United Kingdom own cryptocurrencies. 14 percent of them buy them with credit, and 12 percent believe the FCA will protect them if something goes wrong. However, the FCA has stated that they will not be protected.

In July, a poll of 1,000 U.K. adults aged 18 to 29 revealed that 27% used credit cards, 17% used a student loan, and 12% indicated they utilised other sorts of borrowing to invest in meme cryptocurrency dogecoin.

This might be a double-edged sword, as investors may lose money on their cryptocurrencies and then find it difficult to repay the loans and credit they used to make those investments.

National regulators should try to establish global regulations, improve cross-border supervision, and push for data standardisation because this is such a new field, according to the IMF.

"Time is of the importance, and deliberate, quick, and well-coordinated global action is required to allow benefits to flow while also addressing vulnerabilities," the IMF stated in October.