Rapid uptake of crypto in developing economies a concern, says Gopinath

INTERNATIONAL MONETARY FUND'S (IMF) first deputy managing director Gita Gopinath on Thursday flagged concerns about the rise of crypto uptake in developing economies, saying that though nascent, it poses a risk in terms of currency substitution.

- ISHAAN MITAL

In an interview with the Financial Times, Gopinath said, "We are seeing some pretty rapid growth of uptake of crypto in some emerging markets."

Emerging markets faced risks from crypto uptake, especially stablecoins, in terms of "disintermediation of their financial institutions," she said. "In terms of currency substitution, those risks are rising," Gopinath added.

Gopinath's comments came against the backdrop of US President Donald Trump's push for a strategic crypto reserve and backing to the issuance of stablecoins to make America the "crypto capital of the world."

In the Indian subcontinent, Pakistan has recently struck a deal with US-based World Liberty Financial (WLFI), a firm backed by the Trump family, for that country to emerge as a crypto hub while promoting the use of blockchain technology and the use of stablecoins for payments and remittances.