Investors Shouldn’t Ditch Cryptocurrencies Over Terra Collapse, Says IMF Director

Although the International Monetary Fund (IMF) has already taken a position on several occasions against cryptocurrencies, recently, the managing director of the IMF, Kristalina Georgieva, stated that investors should not abandon the crypto sector due to the collapse of the Terra (LUNA) network. .

According to her, not all blockchain networks are like Terra. Therefore, investors must remain engaged with the digital asset sector.

Don’t take away the importance of cryptocurrencies

According to Georgieva, the failure of LUNA and UST should not become a reason for people to turn their backs entirely on the crypto market.

In addition, she praised the “faster service, much lower costs and more inclusiveness” that the asset class offers.

In Georgieva’s opinion, there are numerous blockchain projects that bring certain benefits. So people shouldn’t compare them to the LUNA and UST fiasco:

“I beg you not to take the importance of this world. It offers us faster service, much lower costs and more inclusion. But we just need to separate apples from oranges and bananas.”

About the Terra Collapse

This May, the Terra ecosystem was at the center of discussions not only in the crypto market, but also across the broader spectrum. This came after the TerraUSD (UST) stablecoin lost its one-to-one “peg” (parity) with the United States dollar.

To try to “save” the peg, the Terra team minted a huge amount of LUNA. As a consequence, the price of LUNA went practically to zero.

Also on Wednesday, the vote to create a “fork” of the Terra network was concluded. The project restructuring plan submitted by Do Kwon was approved.

The old network will be called Terra Classic and the cryptocurrency will be LUNA Classic (LUNC). In addition, the team will distribute LUNA 2.0 tokens to UST and LUNA holders. Ultimately, the UST stablecoin will not have continuity.

Beware of Algorithmic Stablecoins

While it affected the entire crypto market, in particular the credibility of stablecoins, the debacle should not be understood as a general meltdown.

Georgieva pointed out, however, that attention needs to be paid to algorithmic stablecoins such as UST. According to her, stable digital currencies backed by cash or other assets are a less risky investment option than those that rely on algorithms to maintain their valuation.