Christine Legarde, General Manager of International Monetary Fund (IMF), has recently stated that crypto is “clearly shaking the system” and steps must be taken for regulation of this space so that disruption in global economic stability can be stopped. Christine urged for financial regulations to be imposed on this fintech innovation.

While talking to CNBC, she said:

I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.

Christine has a strong background in terms of international finance as back in 2005, she was French government’s minister of foreign trade. In 2011, when France took over the presidency of the G-20, she led various reforms to be introduced in the international monetary system. Her concern, though well-founded for now, shows that cryptos are disrupting world economy at a fast pace. This remark of “shaking the system” can be interpreted as an acknowledgment to the power that cryptos hold.

Even banks are adopting the ways of crypto and blockchain now. JPM Coin, which is a blockchain-based stablecoin launched by JP Morgan, is a clear indication that the status quo in the financial world is being affected by cryptos’ advancements.

READ MORE: JPM Coin is a ‘Bargain Before Death’ of Financial Institutions

IMF is an international body of 189 member countries that offers loans to developing countries. It is a bank not for individuals but for countries. The concern shown by IMF regarding cryptos shows that as cryptos are developing and getting more and more attention, the banking system across the globe feels threatened. Though she made no such direct remark, reading between the lines points to this exact issue. One could even say an alternate to banking system has taken form.

Bitcoin rose to global prominence after the economic crisis of 2008, after the collapse of banking system and many businesses were shut down. As fiat currencies crashed across the globe, the need for an alternative arose and resulted in the inception of cryptocurrencies. Cryptocurrencies are peer-to-peer decentralized payment solution and they are not controlled by central or state banks. Since Bitcoin was the first-ever cryptocurrency, it now has the most market capitalization across the globe. Bitcoin and other cryptos provide an alternative currency framework that is purely digital and is internet-based.

READ MORE: Banks Are The Best Custodians If You Don’t Want Your Money Back

The network built by cryptocurrencies is distributed, meaning every node participating in the network carries a record of all the transactions happening on the network. This establishes a trust-less and transparent system of operation where trust is in the network instead of banks. Everyone from across the globe can join in to maintain a crypto network, acting as a node usually. This eliminates the need for an intermediary, or banks, from a financial network.

READ MORE: Bitcoin is Not Harnessing, It’s Replacing Western Union & Remittance Industry

Cryptos have additional perks associated with them as well. The payment system established by cryptocurrencies is global, meaning it transcends the boundaries established by countries. Worldwide transfer of money can be made in a matter of minutes unlike various services such as Western Union, which sometimes takes days to transfer money from a local bank in one country to a local bank in another. The transaction fees associated with cryptos are way less, compared to the traditional system. This is exactly what threatens the banking system.

READ MORE: If Bitcoin (BTC) Was Just A Bubble All Along, It Couldn’t Have Popped Twice

Although cryptos are set to replace or supplement the current banking system, there are a lot of issues associated with them regarding their viability and safety. Since it has been only a decade Bitcoin came on to the scene, there is hardly any regulatory clarity regarding digital assets. A lot of investors have lost large amounts of money owing to the scams and fraudulent activities associated with cryptos. Fake initial coin offerings (ICOs) have been among the biggest issues for these digital assets.

Since the market capitalization of cryptos is very small, big whales participating in the network use pump and dump strategies to manipulate cryptocurrencies market value in their own favor. Lack of regulatory clarity and manipulation are also the reasons why an exchange-traded fund (ETF) has not yet been approved by the regulatory body in charge, the United States Securities and Exchange Commission (SEC). But as developments are made in the crypto world and regulatory clarity is obtained, cryptos are only expected to get stronger, and the banks even more threatened. Just like every other innovation, this space requires time to mature.

Cryptos have challenged the centuries-old banking system. If the negative aspects linked with the cryptos such as usage in dark web, money laundering and frauds are checked properly, they will surely revamp the entire financial system of the world. In fact, as their staunch proponents claim, cryptos might make the debt-based banking system obsolete in the future.

READ ALSO: Facebook Crypto Coin is a ‘Red Alert’ for Remittance & Banking Industry