The IMF is concerned about cryptocurrency for three reasons.

One issue identified by the IMF is that many firms are trading these assets "without good operational, governance, and risk standards."

According to the Fund, customers are in jeopardy. Furthermore, crypto assets "may open unwelcome avenues for money laundering and terrorist funding," according to the Fund.

Cryptocurrencies are causing concern at the International Monetary Fund, mainly because the young sector is expanding rapidly and regulation is not keeping up. According to IMF data, the entire market value of all crypto assets topped $2 trillion in September of this year, signifying a 10-fold increase from levels recorded at the start of 2020.

One of the issues raised by the IMF is that many of the individuals and financial institutions dealing these assets "without good operational, governance, and risk policies."

As a result, the Fund has said that consumers are in danger, citing "inadequate transparency and monitoring" in this area. Furthermore, it feels that crypto-assets create "data gaps" and "may open unwelcome avenues for money laundering and terrorist funding."

Other institutions have called for further effort to make these investments more secure. Cryptocurrencies may be a contentious issue, with some claiming that they are the future of money and others warning of the hazards.

Policymakers must examine cryptocurrency advertising and ensure that consumers understand the dangers of investing in such a volatile asset. Even during a single trading day, prices might move dramatically.

Another difficulty for regulators is that young people are particularly interested in this sector and frequently make their initial investments in cryptocurrency using loans and credit cards.

According to the data published by the FCA, in June, around 2.3 million individuals in the United Kingdom own cryptocurrencies. Fourteen per cent of them buy them on credit, and 12% think that the FCA will protect them if something goes wrong.

However, the FCA has stated that it would not defend them.A poll of 1,000 U.K. adults aged between 18 and 29 showed in July that 27% of them used credit cards to invest in meme crypto dogecoin, 17% used their student loan, and 12% said they used other types of loans -this might be a double-edged sword for investors, as they may suffer losses on their cryptocurrencies and then struggle to repay the loans and credit used to make such investments.

According to the IMF, national regulators should establish global regulations, improve cross-border oversight, and push for data standardization because it is such a new area.