Cryptocurrency money what is it how does it effect to the financial system any potential financial crisis with the existence of cryptocurrency

NATIONAL ECONOMICS UNIVERSITY
ADVANCED EDUCATION PROGRAMS


CAPITAL MARKET
MID TERM INDIVIDUAL ASSIGNMENT:
Cryptocurrency money? What is it? How does it effect to the financial system?
Any potential financial crisis with the existence of cryptocurrency?

Elisa Giuliani
th
Published: 19 September,
2014
Journal of Business Ethics
Vu Quynh Anh
Student ID: 11180556
0


Class: Advanced Finance
60B
Lecturer: Assoc. Prof.
BUI HUY NHUONG
HANOI
NOVEMBER 2020
Vu Quynh Anh
Student ID: 11180556
Class: Advanced Finance
60B
Lecturer: Assoc. Prof.
BUI HUY NHUONG

HANOI
NOVEMBER 2020
1


Elisa Giuliani
Published: 19th September,
2014
Journal of Business Ethics
CAO PHUONG LINH
Student ID: 11192751
Class: Advanced Finance 61B
Lecturer: Assoc. Prof. Dr. NGUYEN THI MINH HUE
Hanoi, 2022

2


Table of Contents
I. INTRODUCTION OF CRYPTOCURRENCY.........................................................2
1. History of Cryptocurrency..................................................................................2
2. Definition of Cryptocurrency..............................................................................2
a. Definition......................................................................................................... 2
b. Distinguish the concepts of Electronic currency, Virtual currency, and
Cryptocurrency....................................................................................................... 3
3. Types of Cryptocurrency.....................................................................................3
4. How does Cryptocurrency work?........................................................................4
5. Current situation of Cryptocurrency....................................................................5
a. Global situation of Cryptocurrency..................................................................5
b. Current situation of Cryptocurrency in Vietnam..............................................5

II. CRYPTOCURRENCY’S EFFECT ON FINANCIAL SYSTEM.............................6
1. Definition of Financial system............................................................................6
2. Positive impact of Cryptocurrency on Financial system.....................................7
3. Negative impact of Cryptocurrency on Financial system....................................9
III. POTENTIAL FINANCIAL CRISIS WITH THE EXISTENCE OF
CRYPTOCURRENCY................................................................................................10
1. What causes Financial crises?...........................................................................10
2. Will Cryptocurrency cause the next Financial crisis?........................................11
3. Conclusion........................................................................................................13
REFERENCES........................................................................................................... 14

3


I. INTRODUCTION OF CRYPTOCURRENCY
1. History of Cryptocurrency
Before Bitcoin
Cryptocurrency’s technical foundations date back to the early 1980s when an
American cryptographer named David Chaum invented a “blinding” algorithm that
remains central to modern web-based encryption. The algorithm allowed for secure,
unalterable information exchanges between parties, laying the groundwork for future
electronic currency transfers.
About 15 years later, an accomplished software engineer named Wei Dai published a
white paper on b-money, a virtual currency architecture that included many of the
basic components of modern cryptocurrencies, such as complex anonymity
protections and decentralization. However, b-money was never deployed as a means
of exchange.
The late 1990s and early 2000s saw the rise of more conventional digital finance
intermediaries. Chief among them was PayPal, which made Tesla founder and noted
cryptocurrency advocate Elon Musk’s first fortune and proved to be a harbinger of

today’s mobile payment technologies that have exploded in popularity over the past 10
years. But no true cryptocurrency emerged until the late 2000s when Bitcoin came
onto the scene.
Bitcoin and the Modern Cryptocurrency Boom
Bitcoin is widely regarded as the first modern cryptocurrency — the first publicly
used means of exchange to combine decentralized control, user anonymity, recordkeeping via a blockchain, and built-in scarcity.
It was first outlined in a 2008 white paper published by Satoshi Nakamoto, a
pseudonymous person or group.
In early 2009, Nakamoto released Bitcoin to the public, and a group of enthusiastic
supporters began exchanging and mining the currency.
By late 2010, the first of what would eventually be dozens of similar cryptocurrencies
— including popular alternatives like Litecoin — began appearing. The first public
Bitcoin exchanges appeared around this time as well.

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2. Definition of Cryptocurrency
a. Definition
A cryptocurrency is a digital or virtual currency that is secured by cryptography,
which makes it nearly impossible to counterfeit or double-spend. Many
cryptocurrencies are decentralized networks based on blockchain technology—a
distributed ledger enforced by a disparate network of computers. A defining feature of
cryptocurrencies is that they are generally not issued by any central authority,
rendering them theoretically immune to government interference or manipulation.
b. Distinguish the concepts of Electronic currency, Virtual currency, and
Cryptocurrency

3. Types of Cryptocurrency
Cryptocurrency can be clustered into two distinct categories: coins and tokens.

- Coins and altcoins

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A coin is any cryptocurrency that uses its own independent blockchain. For example,
Bitcoin is considered a “coin” because it runs on its own infrastructure. Similarly,
Ether is operated via the Ethereum blockchain.
The term “altcoin” is used to refer to any coin other than Bitcoin. Many altcoins
operate similarly to Bitcoin. However, others, such as Dogecoin, are rather different.

Doge, for instance, offers an unlimited supply of coins compared to Bitcoin’s cap of
21 million coins.
-

Tokens

Like coins, tokens are also digital assets that can be bought and sold. However, tokens
are a non-native asset, meaning that they use another blockchain’s infrastructure.
These include Tether, which is hosted on the Ethereum blockchain, and others,
including TerraUSD, Chainlink, Uniswap, and Polygon.
Blockchain technology is open source, meaning any software developer can use the
original source code and create something new with it. There are thousands of
cryptocurrencies. Ten popular types of cryptocurrency are Bitcoin, Ether, Binance
Coin, Tether, Solana, XRP, Cardano, USD Coin, Terra and Avalanche.
4. How does Cryptocurrency work?
Cryptocurrencies are not controlled by the government or central regulatory
authorities. As a concept, cryptocurrency works outside of the banking system using
different brands or types of coins – Bitcoin being the major player.
- Mining
Cryptocurrencies (which are completely digital) are generated through a process
called “mining”. This is a complex process. Basically, miners are required to solve
certain mathematical puzzles over specially equipped computer systems to be
rewarded with bitcoins in exchange. tends
In an ideal world, it would take a person just 10 minutes to mine one bitcoin, but in
reality, the process takes an estimated 30 days.
- Buying, selling and storing
Users today can buy cryptocurrencies from central exchanges, brokers, and individual
currency owners or sell it to them. Exchanges or platforms like Coinbase are the
easiest ways to buy or sell cryptocurrencies.
Once bought, cryptocurrencies can be stored in digital wallets. Digital wallets can be

“hot” or “cold”. Hot means the wallet is connected to the internet, which makes it easy
to transact, but vulnerable to thefts and frauds. Cold storage, on the other hand, is
safer but makes it harder to transact.
- Transacting or investing
6


Cryptocurrencies like Bitcoins can be easily transferred from one digital wallet to
another, using only a smartphone. Once you own them, your choices are to: use them
to buy goods or services, trade-in them, or exchange them for cash
If you are using Bitcoin for purchases, the easiest way to do that is through debit-cardtype transactions. You can also use these debit cards to withdraw cash, just like at an
ATM. Converting cryptocurrency to cash is also possible using banking accounts or
peer-to-peer transactions.
5. Current situation of Cryptocurrency
a. Global situation of Cryptocurrency
Every country in the world has different approaches to this new currency. If the
Netherlands accepts it recklessly, the United Kingdom and the US are more cautious
with this currency because of their fear for speculation, and potential risks to the
economy. In contrast, China, and Thailand tend to adopt increasingly tightening and
prudent policies on this kind of currency.

b. Current situation of Cryptocurrency in Vietnam
Bitcoin first appeared in Vietnam at the end of 2013 and at the beginning of 2014 in
two major centers, including Hanoi and Ho Chi Minh City. At present, Vietnam as
well as many countries are still embarrassed about behaving with the cryptocurrency
and related activities (exchanging transactions, importing and using digital currency
“digging” machine...). In Vietnam, Bitcoin has been traded but not recognized by the
7

Government as a currency or means of payment, and it has not been managed and put
under control. The informal cryptocurrency transfer activities have been developed
relatively, even spreading in rural areas, accompanied by fraudulent activities and lack
of transparency. In March, 2014, in Vietnam, the first Bitcoin dealer named Bitcoin
Vietnam was set up at Bitcoin.vn, forming the Bitcoin VBTC Exchange. On June 5th
2016, the first Bitcoin ATM machine existed in Vietnam. In 2 years of 2016-2017,
nearly 1000 Bitcoin diggers were imported to Vietnam.
On August 21st 2017, the Prime Minister approved the project of improving the legal
framework for management of virtual assets, electronic currency, digital currency,
including Bitcoin. Over the past time, the SBV has repeatedly issued warnings,
affirming that Vietnam has not accepted cryptocurrency as monetary currency; the use
of cryptocurrency as payment means violates the law. Previously, the State Bank of
Vietnam (SBV) submitted the Government to issue Decree 80/2016/ND-CP providing
regulation on legal means of payment in Vietnam (excluding Bitcoin and other
cryptocurrency) and additional regulations on prohibiting issuance, supply, and use of
cryptocurrency.
Decree 96/2014/ND-CP stipulated sanctions on administrative fines to illegal
issuance, provision and use of payment instruments. In essence, the SBV believes that
cryptocurrency is virtual assets (often called coins). However, both the Civil Code of
2005 and the Civil Code of 2015 have not yet had definitions and specific regulations
on governing virtual properties (including cryptocurrency).

II. CRYPTOCURRENCY’S EFFECT ON FINANCIAL SYSTEM
1. Definition of Financial system
A financial system is an economic arrangement wherein financial institutions facilitate
the transfer of funds and assets between borrowers, lenders, and investors. Its goal is
to efficiently distribute economic resources to promote economic growth and generate
a return on investment (ROI) for market participants.
There are several financial system components to ensure a smooth transition of funds
between lenders, borrowers, and investors:

● Financial Institutions: act as intermediaries between the lender and the
borrower when providing financial services. These include banks, insurance
companies, investment companies and brokerage firms.
● Financial Markets: These are places where the exchange of assets occurs with
borrowers and lenders, such as stocks, bonds, derivatives, and commodities.
Financial markets help businesses to grow and expand by allowing investors to
contribute capital.

8


● Tradable or Financial Instruments: Tradable or financial instruments enable
individuals to trade within the financial markets. These can include cash, shares
of stock (representing ownership), bonds, options, and futures.
● Financial Services: Financial services provide investors a way of managing
assets and offer protection against systemic risk. These also ensure individuals
have the appropriate amount of capital in the most efficient investments to
promote growth. Banks, insurance companies, and investment services would
be considered financial services.
● Currency (Money): is a form of payment to exchange products, services, and
investments and holds value to society.

2. Positive impact of Cryptocurrency on Financial system
- Cryptocurrency decreases the dependence on Fiat money, leading to inflation
hedge
One characteristic of cryptocurrency is natural decentralization. Crypto assets were
created as an alternative to traditional banking infrastructure that don’t need an
intermediary and aren’t controlled to the capacity of a centralized government, bank,
or agency. Instead of relying on centralized intermediaries in these transactions, the
trust is placed in the blockchain code and the distributed nature of the blockchain.

Therefore, it doesn’t have an impact on traditional currency resulting in the
opportunities to be an alternative for fiat money. Nowadays, technology is developed
rapidly, people depend more on digital transferring services because of its
convenience, especially the high speed of transferring. Using crypto to be a payment
method can decrease the dependence on traditional or authorized money, therefore,
contributing to inflation hedge. Because mineable cryptocurrencies with a limited
supply cap, like Bitcoin, Litecoin, and Monero, to name a few, are thought to be good
hedges against inflation. Since the 1970s, confidence in U.S. banks has consistently
decreased. And in countries where the domestic currency is constantly fluctuating,
causing living conditions to plummet, cryptocurrency can be used to circumvent these
situations.
-

Cryptocurrency supports customer’s transactions

1.7 billion people worldwide don’t have a bank account. They are financially
disadvantaged and often must resort to dangerous lending practices. Interestingly, a
9


large number of this population possess a cell phone, and because cryptocurrencies
can be transacted through mobile applications, cryptocurrency can easily become a
viable option for them. An added advantage of cryptocurrency is that it’s completely
decentralized, which means that for citizens living in countries with currency
instability, cryptocurrency allows them to trade freely across borders with citizens of
more well-off countries, creating a level of economic equality.
-

Cryptocurrency creates potential for an effective payment system

Traditional monetary and electronic payment systems involve a number of
intermediaries, such as government central banks and private financial institutions. To
carry out transactions, these institutions operate and maintain extensive electronic
networks and other infrastructure, employ workers, and require time to finalize
transactions. To meet costs and earn profits, these institutions charge various fees to
users of their systems. Advocates of cryptocurrencies hope that a decentralized
payment system operated through the internet will be less costly than the traditional
payment systems and existing infrastructures.
In addition, as can be seen from the characteristics of the cryptocurrency, there are
many aspects that can support this system to be an effective one:
● Unlimited possibilities of transaction – each of the wallet holders can
pay to anyone, anywhere, and any amount. The transaction can not be
controlled or prevented, so you can make transfers anywhere in the
world.
● Speed of transaction – it is possible to process thousands of transactions
in less than one second.
● Secure and private
● Anonymity – It is completely anonymous and at the same time fully
transparent. Any company can create an infinite number of bitcoin
addresses without reference to name, address, or any other information.
custody services for customers.
-

Cryptocurrency is eliminating previous imperfections in the banking system
10


Traditional banking was seen as a convenient way of making financial transactions.
Nonetheless, advances in technology have left banks vulnerable to data breaches and
other governance & compliance issues. Cryptocurrencies are playing an integral role

in addressing these imperfections. For instance, crypto banks are more immune to data
hacks compared to traditional banks. Similarly, cryptocurrency transactions are
anonymous and secure. If someone makes a payment to you using paper cash, there’s
a possibility that the money could be counterfeit. This isn’t the case with crypto-cash
since you cannot counterfeit a cryptocurrency.
3. Negative impact of Cryptocurrency on Financial system
- Cryptocurrency is a threat to traditional banks
When cryptocurrency becomes popular or virtual currency transactions increase,
people reduce the amount of short-term deposits they normally use to pay for credit
card or bank transactions because they view cryptocurrencies as a new asset class.
Furthermore, with the basic advantage in virtual currency transactions being smart
contracts, which settle transactions between two parties independently without the
need for a third party, virtual currency has a decentralized nature that breaks normal
currency transaction channels. Hence, commercial banks will witness a decline in
their revenues and might lead to the bankruptcy of some small banks. Indeed, In its
annual 10-K filing with the Securities and Exchange Commission (SEC), released
Feb. 22, Bank of America Corp. (BAC) listed cryptocurrencies among the risk factors
that could impact the bank's competitiveness and reduce its revenues and profits.
French banking giant, BNP Paribas released a report where they discussed the
technology behind cryptocurrency and how it could lead to making the traditional
banks redundant.
-

Cryptocurrency supports money laundering

Criminals and terrorists are more likely to conduct business in crypto and to hold
crypto as a digital asset than to use financial intermediaries such as banks, in part
because crypto is anonymous and allows them to avoid establishing relationships with
and records at financial institutions that may be subject to anti-money laundering
reporting and compliance requirements. Since the Bitcoin digital currency is not

controlled by any organization or government, the application of monetary policies to
Bitcoin is completely impossible. The decentralized nature of cryptocurrency
transactions may similarly provide a means for criminals to hide their financial
11


dealings from authorities. Therefore, the emergence of cryptocurrencies with absolute
anonymity and security makes the control and prevention of money laundering much
more difficult.
-

Cryptocurrency causes price volatility risk

Because there is no specific regulatory market, the price of cryptocurrencies can go up
and down by the day, by the hour without any remedy. The volatility can lead to
investment bubbles because for some reasons. Firstly, cryptocurrency isn’t
intrinsically valuable, so it is affected by the laws of supply and demand. Secondly,
unlike fiat currency, some cryptos are in limited supply (for instance, Bitcoin supply is
limited to 21 million). Therefore, some entities have major holdings in crypto and can
influence the rise and fall of crypto markets. No central bank or government can step
in to support or prop up markets and artificially subdue volatility. Bitcoin value and
other cryptocurrencies keep changing every now and then. In the year 2018, Bitcoi’s
value was $17000, but it became $7000 in a month. This instability is a great
disadvantage.
-

Cryptocurrency is a threat to investors

Scamming was the greatest form of cryptocurrency-based crime in 2021, followed by
theft — most of which occurred through hacking of cryptocurrency businesses.

Because cryptocurrencies are digital technologies, which means they are prone to
hacker attacks. According to Bitcoin Rush, Several ICOs have been hacked this
summer, causing investors to lose many dollars. (One attack led to the loss of $473
million.)

III. POTENTIAL FINANCIAL CRISIS WITH THE EXISTENCE OF
CRYPTOCURRENCY
1. What causes Financial crises?
According to writers Allen, Babus, and Carletti in their 2009 study, financial crises
occur following either bank runs or a sudden severe drop of asset prices in capital
markets, both of which will consequently cause the collapse of big financial and nonfinancial firms.
Kaminsky and Reinhart (1999) also studied a wide range of crises affecting 20
countries, including 5 industrial and 15 emerging economies. They found that
financial liberalization and significant credit expansion occurred before many of the
financial crises. According to the authors, there was too much liquidity in the system.
Liquidity refers to the ability to convert assets into cash at a price and time of your
12


choosing. Too much liquidity in the financial system provides incentives for investors
to take unnecessary risks, and the excess liquidity caused asset price bubbles to build
up.
An asset price bubble occurs when people invest in a market (possibly shares, or
property, or commodities) because they think the rising price will continue to increase.
The demand from investors then causes the asset price to rise in a self-fulfilling cycle.
The increase in price is due to speculation and is not supported by any fundamental
changes in demand and supply in the economy.
Without continuing rising demand from investors, at some point the asset price bubble
bursts. The financial sector is very vulnerable to shocks, and a shock that initially
affects only a particular sector or a few firms and institutions, or a specific region, can

easily become systemic and then infect the larger economy – referred to as contagion.
The contagion effect exists because of direct linkage between banks (or financial
networks) and indirect balance sheet linkages among firms.
We can apply this analysis to the most recent global financial crisis in 2007-2008. The
root reason it occurred was low-interest rates and too much liquidity in the American
financial system. This encouraged the growth of subprime mortgage lending to
borrowers who, in other circumstances, would not be granted mortgages because they
were more likely to default. In order to spread the risk involved in subprime
mortgages, American banks repackaged these subprime mortgages as mortgagebacked securities (which appeared to be more secure than they were) and sold them in
the Asset-Backed Securities (ABS) market.
These mortgage-backed securities were purchased by many international financial
firms, increasing the potential for contagion. The default of subprime mortgage
borrowers triggered the collapse of the subprime mortgage market, which in turn
caused the credit crunch in the banking sector. The problems in the credit market were
later transmitted to other assets through capital markets, as banks tried to sell shares to
support their liquidity. This finally led to the bankruptcy of some large firms, such as
Lehman Brothers.
2. Will Cryptocurrency cause the next Financial crisis?
The Bank of England’s deputy governor for financial stability, Jon Cunliffe, has
warned that cryptocurrencies could spark a global financial crisis unless tough
regulations are introduced. He likened the rate of growth of the crypto asset market,
from $16 billion five years ago to $2.3 trillion today, to the $1.2 trillion subprime
mortgage market in 2008 and concluded “When something in the financial system is
growing very fast, and growing in largely unregulated space, financial stability
13


authorities have to sit up and take notice". Bitcoin and Ethereum, the two largest
cryptocurrencies, plunged more than 30% in value earlier this year before recovering,
and have proven extremely volatile since their creation. The price of bitcoin has fallen

by 10% in a single day on almost 30 occasions in the past five years, the largest of
which was a fall of nearly 40% after a cyber-incident at Seychelles-based bitcoin and
cryptocurrency exchange BitMEX. “The crypto world is beginning to connect to the
traditional financial system and we are seeing the emergence of leveraged players.
And, crucially, this is happening in largely unregulated space,” Cunliffe said. His
comments echo those of Bank of England Governor Andrew Bailey in May, who
cautioned that cryptocurrency investors should be prepared to lose all their money due
to the assets’ lack of “intrinsic value.” The U.K.’s Financial Conduct Authority has
also warned of the risky nature of crypto investment. Cunliffe said the risk to financial
stability could grow rapidly if the market continues to expand at such a pace, but the
scale of those risks will be determined by the speed of response by regulators and
governments.
Currently, an increasing number of financial institutions are entering the crypto space.
As a sign of change, more hedge funds are moving into this space. New investments
like Bitcoin futures are also emerging. Nevertheless, some experts say that Bitcoin and
other virtual currencies are yet to pose a risk because they are still too detached and
too small compared to other financial markets. However, their increasing integration
with the traditional financial market is happening rapidly. And this could eventually
threaten stability while exacerbating the next financial crisis. Essentially, Bitcoin
enables people to exit the traditional financial system and disconnect from it
completely. And many people are contemplating this move due to their declining trust
in conventional economic systems. Additionally, more people rush to own Bitcoin,
thinking it is recession-proof and a hedge against inflation. These factors might seem
minor now, but they could enable Bitcoin to trigger the next financial crisis.
The Financial Stability Board — an international body that brings together regulators
from 24 countries and jurisdictions — said that the "fast evolving" crypto market
could quickly reach a point where it becomes a "threat to global financial
stability" due to its size, structural vulnerabilities and growing ties to the traditional
financial system. "Financial stability risks could rapidly escalate," the group said that
policymakers needed to step up. The assessment comes as banks and other big market

players ramp up their exposure to crypto due to requests from clients, despite its
volatility. FBS explains that when major players enter the market, large volatility in
the cryptocurrency market can trigger a series of unexpected events. The FSB
compares this to developments in the US housing market in 2008, which triggered the
global financial crisis. “As was the case with the subprime lending crisis in the US.
14


Low participation does not mean low risk, especially when transparency and
regulatory systems are not enough like cryptocurrency.”
Bitcoin has soared in value this year, rising over 1,000% against the dollar so far. This
has prompted both increased interest and concern from investors and financial
executives. EU and UK authorities are planning to crack down on bitcoin as concerns
grow that cryptocurrencies are being used to facilitate financial crimes and launder
money. Were there to be another crash, said by Garrick Hileman, an economic
historian at the University of Cambridge told Business Insider, it's possible there
would be an even greater backlash against traditional banks than after 2008 — in
the wake of which bitcoin was first developed — and cryptocurrencies could be even
more widely embraced.
Brett Heath, CEO of Canadian company Metalla Royal & Streaming, warned that
mass adoption of cryptocurrencies could hurt the economy, leading to the next
global financial crisis if the market were to fall. He compared the crypto market to
the “dot-com bubble” of the early 2000s and the 2008 financial crisis. “When you
look back at the financial crises of the past decades, you see them. have a few things
in common. One of them is the application of a series of financial products and new
technologies that have not been well researched." "Back to the 2008 financial crisis...
We used a bunch of mortgage-backed securities (MBS)... When people adopted this
new financial product, it crashed. fall", Heath thinks that cryptocurrencies are
following the "trace" of 13 years ago. In addition, Heath expressed concern about the
risk of mass investing in "no intrinsic value" assets. The result could lead to similar

sell-offs when the tech "dot-com bubble" burst in the early 2000s.
3. Conclusion
The cryptocurrency market is booming, and it’s only expected to get bigger. As the
digital economy continues to grow at an astronomical rate, cryptocurrencies are sure
to play a large role in our financial system. While the positive effects of
cryptocurrencies cannot be denied, its negative effects can cause potential financial
crisis in the future for some reasons following. One of the main features of
cryptocurrency lies in its instability. The crypto market is volatile, and the prices of
coins are in constant fluctuation. There are many practical scenarios of this in the past,
and it currently happens again with Bitcoin. In less than 24 hours, the significant
crypto assets hitherto gaining might plunge aggressively and vice versa. The fact that
the blockchain assets do not have regulations makes them volatile, and investors need
to be wary. Experts believe that the crypto assets lack intrinsic value, making it easy
for investors to run at a loss easily.

15


Financial bubbles are the another risk that should be considered. Cryptocurrencies are
influenced by a similar hype cycle, where investors jump onto them and cause
massive price appreciation without any fundamental business model behind it to
justify such valuations. The end result can be financial losses for those who buy into
cryptocurrencies that fail or were merely scams from the get-go. Due to past
occurrences, for instance, the 2008 housing crisis that led to the financial crisis in the
US, the crypto market is currently following the same pattern. The exponential growth
and widespread acceptance of cryptocurrencies are a concern to experts. Blockchain
apps are volatile and vulnerable to price corrections, and they have no regulatory body
to balance the tide during a crisis. Many external factors are responsible for the drastic
fall in the price and value of cryptocurrencies. Experts believe a financial crisis is
imminent if significant cryptocurrencies continue to witness such sharp falls. While it

is difficult and takes a series of events for a financial crisis to occur, if the population
of investors in the crypto market keeps increasing, a crisis in the market might affect
the general economy. It is, therefore, suitable for central banks and financial regulators
to put measures in place to regulate the financial sector to avoid an imminent financial
crisis.
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