Risky assets need regulation, so do crypto: Gita Gopinath | Exclusive

The valuation of cryptocurrencies saw a sharp fall from $3 trillion to $1.5 trillion. And like all high-risk assets, cryptocurrencies will have to be regulated, Gita Gopinath said.

Crypto assets are an extremely risky, speculative asset class and with any risky asset there has to be regulation, International Monetary Fund’s deputy managing director Gita Gopinath told India Today TV at Davos, adding, “I have completely stayed away from it. But that’s just me and my level of risk aversion.”

“It went from about $3 trillion market to $1.5 trillion market in about six months - very quick moves. It is not a very easy-return investment. So these are very large risks you are taking,” she said, pointing out the risks involved with the digital currency.

Finance Minister Nirmala Sitharaman at the spring meeting of the IMF called for regulating the cryptocurrencies, saying that innovation is disruptive. She also stressed the risks posed by cryptocurrencies and unhosted wallets in enabling money laundering and terror financing.

#EXCLUSIVE: Economist @GitaGopinath on crypto trading.Says, "Crypto assets are a very risky asset class."#Economy #Newstrack #IndiaTodayatDavos | @rahulkanwal pic.twitter.com/41E3m5A9mM

Global growth was downgraded in April from 4.4% to 3.6% entirely because of Russia’s invasion of Ukraine, Gopinath told India Today TV, adding that the war downgraded growth for over 80% of the world and upgraded inflation for almost all those countries as well.

“The cost of living is going up. China is slowing down due to lockdown. The realty sector is also slowing,” she said.

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