The International Monetary Fund (IMF) Capital Markets Director thinks there could be further failures of “coin offerings”, including algorithmic stablecoins amid the ongoing crypto winter.
In the interview with yahoo Finance on July 27, Tobias Adrian, Director of Money and Capital Markets for the IMF, said that there could be further failures of some coin offerings, especially algorithmic stablecoins:
“We could see further selling, both in crypto assets and in risky asset markets, like stocks…there could be further failures of some of the coin offerings – in particular, some of the algorithmic stablecoins that have been hit the hardest, and there are others that may fail.
The IMF chief also noted on Wednesday that he had seen “some vulnerabilities” for some fiat-backed stablecoins, referring to Tether, which he said is not “one-to-one backed” to the U.S. dollar (USD). ).
Adrian also mentioned that stablecoins need a “global regulatory approach” to better protect investors. Adrian said that while it would be difficult to assess whether each cryptocurrency is a security or not, regulators should first ensure that crypto exchanges and wallet providers do their due diligence on the parts before selling them.
Terra USD (UST), now known as TerraClassicUSD, is the most notable algorithmic stablecoin to lose its fixed price, which wiped out $40 billion in market value in May, and is currently priced at $0.04.
Tron’s USDD algorithmic stablecoin also fell to $0.91 in June, but regained its flat price after $700 million worth of USDC was dumped. added to his reserves.
Earlier this month, the founder of Frax Finance, the company behind the FRAX stablecoin, Sam Kazemian, told Cointelegraph that he believes purely algorithmic stablecoins “just doesn’t work.”
Instead, Kazemian said that “on-chain decentralized stablecoins […] need to have [traditional] collateral”.