IMF chief says stablecoins not backed by assets are pyramid, hinting at treasuries

DAVOS, Switzerland – The head of the International Monetary Fund said on Monday that non-asset-backed stablecoins to support them are a pyramid scheme, hinting at a collapse terrawsd And Luna That shocked the cryptocurrency market.

A stablecoin is a type of cryptocurrency that aims to track another asset. In the case of terraUSD or UST as it is also known, I have promised to track files U.S. dollar. So one floor locker equals one dollar.

But treasuries are an arithmetic stablecoin. While other stablecoins like tether and dollar coin claim to be backed by fiat currency and government bonds, terrestrial treasuries have no reserves. Instead, the ability of floor tanks to peg themselves to the dollar Depend on algorithm.

Earlier this month, UST Lost its peg to the dollar. Luna, the sister of the UST code, crashed to 0 dollars. This incident triggered a massive slump in cryptocurrencies which wiped out billions of dollars of value in the market.

“When we look at stablecoins, this is the area where the big mess has occurred. If the stablecoin is backed by assets, one-to-one, it is stable. When it is not backed by assets, but promised to provide a 20% return,” said Kristalina Georgieva, managing director of the fund. The International Monetary Fund, during a session moderated by CNBC at the World Economic Forum on Monday, “It’s a pyramid.”

“What happens to the pyramids? … in the end they crumble.”

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