IMF director sees cryptocurrencies as asset class, not currency

Kristalina Georgieva – upload.wikimedia.org

During a Monday interview with Yahoo Finance, International Monetary Fund (IMF) managing director Kristalina Georgieva said cryptocurrencies are not actual currencies and would not replace the U.S. dollar.

“It could be backed up and in that sense, more secure and less risky, or it could be not backed up and therefore a riskier investment. But it is not exactly money. It’s more like a money management fund,” Georgieva said.

Despite emphasizing the importance of portfolio diversification, Georgieva clarified that this does not mean Bitcoin (BTC) is challenging the greenback.

“So I, for one, am not in a rush to turn my dollars into another currency. It doesn’t mean that you shouldn’t, you know, diversify. But, I wouldn’t worry too much about [bitcoin rivaling the dollar]. There are things that make me lose sleep — that’s not one of them,” she said.

Her remarks coincided with the SEC’s recent approval of new spot Bitcoin-backed ETFs, On January 10, the SEC approved 11 Bitcoin Exchange Traded Funds (ETFs), including BlackRock (BLK.N), Ark Investments and 21Shares (ABTC.S), Fidelity, Invesco (IVZ.N), VanEck, WisdomTree, Grayscale, Hashdex, Valkyrie, BZX and Franklin.

While this marks a notable achievement for the crypto industry, Georgieva maintains that the day when crypto surpasses traditional fiat currencies is still distant.

“The US dollar remains the US dollar, and its position as a dominant currency is due to the massive size of the US economy and the depth of its capital markets,” she said.

Coinbase CFO Alesia Haas described the recent approval of 11 Bitcoin ETFs as a “landmark day for crypto” in the industry. Haas said that the journey for crypto to gain wider acceptance is long, and the recent development is just one step in that process.

The crypto industry has experienced ups and downs over the last five years, including the decline of once-prominent figures like FTX’s Sam Bankman-Fried and Binance’s Changpeng “CZ” Zhao.

Following the mass ETF approval, Bitcoin spiked but then retraced to $42,700, marking a six percent decline in the last seven days. The long-term impact of the ETFs on Bitcoin’s price and the broader crypto industry remains uncertain.

Bernstein senior analyst Gautam Chhugani predicted BTC price to hit $150,000 by 2025 and suggests investors seize the opportunity during Bitcoin dips.

“Our simple advice to all investors is — buy the dip and focus on the new Bitcoin adoption cycle. The minor selloffs are opportunities in view of the asymmetric upside ahead,” said Chhugani.

Market anticipates ETH ETF approval

After the Bitcoin ETF approval, the cryptocurrency market saw increased activity, especially with Ether (ETH) and tokens native to Ethereum-based applications. ETH surpassed $2,400, indicating a five percent increase 24 hours after the approval.

Traders speculated that the recent surge was due to the potential proposal of an ETH ETF. If this occurs, it would enable U.S. investors to invest without directly owning the digital asset, similar to the Bitcoin ETF.

Alex Onufriychuk, CEO of Kaminari, highlighted the crypto community’s enthusiasm for the potential approval of an ETH ETF.

“There’s a noticeable trend towards front-running the Ether ETF,” said Onufriychuk.

Bloomberg ETF analyst Eric Balchunas estimates a 70 percent chance of spot ETH ETF approval by May. However, digital asset lawyer Joe Carlasare expects spot Ether ETFs to be approved this year but believes it will take longer than many anticipate.

“Put another way, I think the SEC is trying to provide guidance that would deter applicants from filing ETFs for every major token,” Carlasare said.

In a recent episode of CNBC’s “Squawk Box”, BlackRock CEO Fink said that he sees value in ETH ETF and described it as a step of tokenization

“ETFs are step one in the technological revolution in the financial markets. Step two is going to be the tokenization of every financial asset,” Fink said.