Hello and welcome to another week of Overbit's Weekly Round Up! Today's first story is as follows: According to the Bank of England, the cryptocurrency market has more than doubled since 2008. However, per the Bank of England's deputy governor for financial stability, this ballooning market is now a threat to the global financial system.

On Wednesday, the Bank of England cautioned that crypto assets had risen from $16 billion five years ago to more than $2.3 trillion today. Compared to the $250 trillion global financial systems, $2.3 trillion may seem like only a drop in the bucket.

However, According to Jon Cunliffe, Deputy Governor of Financial Stability at the Bank of England, the subprime lending sector was valued at $1.2 trillion in 2008.

According to Cunliffe, an un-resilient banking system caused significant and long-term economic damage. "In that case, the knock-on effects of a price collapse in a relatively small market were amplified and reverberated through an un-resilient financial system, causing massive and long-term economic damage," he said.

For the final story of the week, we take a look at the IMF warnings against "disappearing" digital currencies and the instability of stablecoins.

The IMF issued a warning to countries about the growing crypto industry in a study released on Tuesday. It discovered that exchangers had advertised over 16,000 coins, but just about 9,000 remained, highlighting the IMF's lack of consumer confidence in many crypto products.

According to the study, stablecoins are vulnerable to volatility and investor runs since they are connected to another asset. In a study issued on Tuesday, the IMF warned of growing risks in the cryptocurrency economy, including fraud, excessive speculation, and potential "runs" on more stable assets.

"Investor protection concerns loom large for crypto assets and decentralised finance," according to the executive summary of the report. Unlike in regulated securities markets, investors may lose money if tokens vanish.

The report highlights that certain types of tokens are outlawed in Argentina, Mexico, and Thailand, for example. Authorities worldwide have increased their scrutiny of the cryptocurrency business, and some banks have prohibited their clients from transferring cash to particular exchanges. China's recent ban on all cryptocurrency mining and trading is the most extreme illustration of prospective business pressure.

The IMF is especially worried about the volatility and investor run risks associated with stablecoins linked to underlying assets like cash or bonds. Iron Finance's Titan decentralised finance token, an algorithmic stablecoin startup, fell from about $60 to a penny in a matter of hours. As whale accounts liquidated their holdings, a bank run occurred. Billionaire Mark Cuban was taken aback by the disaster. "I got hit like everyone else," he explained later.

The reserve components of the Tether token, which purports to be entirely backed by US dollars but is backed mainly by short-term corporate debt, has also been criticised. The IMF has encouraged countries to work together to overcome technological and legal challenges "where standards have not yet been developed," illustrating that a flexible framework for crypto assets is necessary.

Overall, it seems the IMF believes that central bank digital currencies can aid in stabilising and transparency of the cryptocurrency market, especially those mentioned in this report.

Thanks as always for reading Overbit Round Up! Take care until next time.

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