Cryptocurrency -Reconciliation in new markets pose risks of monetary sovereignty and financial resilience, credit rating scare said Moody’s Ratings in a report Thursday.
The risk is most acute in areas where Crypto’s use extends beyond investments in savings and transfers, according to the report. Moody’s suggests that higher penetration of stableecoins tied to the US dollar weakened monetary transmission when it leads to pricing and settlement, which is increasingly occurring outside a market’s domestic currency.
Stableecoins are Krypto -Tokens, associated with the value of a traditional financial asset, such as a Fiat currency, with the US dollar comfortably the most widespread.
“This creates ‘cryptoization’ pressure analogous to unofficial dollarization, but withgreater opacity and less regulatory visibility,” Moody’s said.
Cryptocurrency can also provide new ways for capital flights through pseudonymous wallets and offshore exchange, giving individuals the opportunity to move wealth abroad discreetly and undermine exchange rate stability, according to the report.
Moody’s also emphasized how increased ownership of cryptocurrency is concentrated in new markets, especially in Southeast Asia, Africa and parts of Latin America. Here, adoption is often driven by inflation pressure, currency pressure and limited access to banking services. In contrast, adoption in more advanced economies, adoption is driven by institutional integration and regulatory clarity.
Crypto ownership is expanded to an estimated 562 million people by 2024, an increase of 33% from 2023, the report says.
Read more: StableCOin Adoption Set for Surge After Genius Act, Hit $ 4T in cross -border Bind: EY Survey
