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According to the IMF, the crypto turbulence will not affect the general financial market

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The turmoil in the crypto market is not a concern for global financial stability, the International Monetary Fund (IMF) said on Thursday in a report that nonetheless raised serious concerns about the global economy.

The global economy is being hit by high inflation and a potential second recession in just two years, the IMF said, given the impact of the Ukraine war and continued lockdowns due to COVID outbreaks. However, markets such as bitcoin, isolated from commercial banks, are not seen as a concern, according to the report.

The relative calm comes despite recent collapses like that of the stablecoin terraUSD and that of the investment fund Three Arrows Capital, a contingency that has prompted some regulators to want to exercise more control over this nascent market.

“Spillovers into the broader financial system have been limited so far,” the IMF said, citing a “dramatic sell-off that has led to larger losses” for crypto investors.

In a June report, the European Systemic Risk Board said the continued rise in popularity of cryptocurrencies could raise “quickly and suddenly” threats to the broader financial market. The IMF has called for more regulation in the sector, and warned El Salvador to remove bitcoin as legal tender .

Standard setters around the world are also working to establish exactly how banks should start entering crypto markets. The Basel Committee on Banking Supervision has proposed a limit on bitcoin holdings , along with a sizable capital requirement that would limit the ability of banks to lend based on crypto reserves.

In an interview published Tuesday, Elizabeth McCaul of the European Central Bank suggested that banking supervisors would in future look at individual lenders’ crypto exposures as part of regular annual reviews.

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