IMF recommends El Salvador regulate Bitcoin ecosystem
The International Monetary Fund (IMF) has once again called on El Salvador to strengthen its regulatory framework and oversight of the national Bitcoin ecosystem. The IMF has stressed the need for changes since the country made Bitcoin a legal tender in 2021.
At a press conference on Thursday (10/3), IMF spokesperson Julie Kozack suggested that El Salvador should not only narrow the scope of application of its (bitcoin law), but also limit the public sector’s exposure to the cryptocurrency.
(Ignoring the IMF warning, the Vice President of El Salvador: Bitcoin will be legal tender for at least five more years)
IMF continues to warn against Bitcoin policy
This recommendation is not the first time the IMF has issued a warning about El Salvador’s Bitcoin policy. As early as August this year, the IMF expressed similar concerns, saying, "While many risks have not yet emerged, both parties agreed that further efforts are needed to increase transparency and mitigate the risks that the Bitcoin project may pose to fiscal and financial stability." The IMF emphasized Further discussion is needed to address these and other important areas.
The ongoing dialogue between El Salvador and the IMF highlights the two sides’ differing views on the use of Bitcoin. In November 2021, shortly after El Salvador decided to adopt Bitcoin as legal tender, the IMF advised against using the cryptocurrency in this way and urged the Central American country to increase regulation and oversight of its cryptocurrency ecosystem. In January 2022, the IMF reiterated its ongoing concerns about El Salvador’s Bitcoin policy.
(IMF field investigation in El Salvador: Maintaining opposition to Bitcoin as legal tender and should not launch Bitcoin bonds)
El Salvador’s Bitcoin Adventure
El Salvador became the first country in the world to make Bitcoin legal tender in September 2021, a move that attracted international attention. Currently, the country holds 5,892 Bitcoins, which is approximately $345 million at current market prices.
El Salvador’s President Nayib Bukele is an active supporter of Bitcoin, touting the cryptocurrency’s adoption as a positive move for the country’s economy. However, he also admitted that Bitcoin adoption has not reached the level he expected. Bukele’s vision is to make El Salvador a hub for Bitcoin and other cryptocurrencies, but challenges remain in the adoption of digital currencies in the country.
IMF still has positive outlook on El Salvador's finances
Despite the IMF’s concerns over the country’s Bitcoin policy, the organization expressed approval of President Bukele’s fiscal strategy. In Thursday's report, the IMF referred to a 2025 budget that projects El Salvador will be debt-free. The IMF’s positive assessment of the country’s fiscal planning suggests that beyond the Bitcoin issue, El Salvador’s other economic policies are in line with IMF recommendations.
This article International Monetary Fund IMF reiterates that El Salvador should strengthen Bitcoin regulation and reduce cryptocurrency positions appeared first on Chain News ABMedia.
