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IMF Says Banking Sector Under Pressure From Crypto Adoption, Warns Against Meme Tokens: Report

The International Monetary Fund (IMF) thinks crypto has the potential to put pressure on the banking sector.

In a new report, the IMF says technological innovation is changing financial services. The report notes that the banking sector could lose market share if the crypto ecosystem grows to become a mainstream alternative to bank deposits or current lending options.

The IMF explains,

“Stronger competition for bank deposits through stablecoins held on crypto exchanges or private wallets may push local banks toward less stable and more expensive funding sources to maintain similar levels of loan growth.

Beyond the direct loss in net interest income, a loss of customer relationships and data on transactions would also undermine credit risk assessment for clients and their ability to offer targeted products to clients.”

The IMF also warns that the crypto ecosystem comes with “consumer fraud and market integrity risks,” specifically cautioning against “meme tokens” such as Shiba Inu (SHIB).

“Most crypto assets are highly volatile, speculative assets. One notable recent example was the increased investor interest in ‘meme tokens’… Some of these tokens were created for speculation purposes, and their price was highly influenced by social media trends.

Relatedly, investors are also likely to face losses from tokens ceasing to exist – something that is less common in regulated securities markets. For example, more than 16,000 tokens have been listed on various exchanges over time, but [only] around 9,000 exist today.”

The IMF isn’t the only institution issuing warnings about crypto’s potential impact on legacy finance. Last week, researchers at the Federal Reserve said digital assets could pose a threat to the supremacy of the US dollar.