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IMF calls on El Salvador to remove legal description of Bitcoin

IMF calls on El Salvador to remove legal description of Bitcoin

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Answer IMF calls on El Salvador to remove legal description of Bitcoin

The International Monetary Fund (IMF) recently urged the authorities in El Salvador to remove the legal tender description of bitcoin.

They described this as a threat to market integrity, financial stability and consumer protection.

Criticism of Bitcoin Law in El Salvador:

The International Monetary Fund publicly disclosed its warning in a posted online statement earlier today, following the conclusion of its Article IV consultations with El Salvador last Monday.

Despite noting the country’s rapid economic recovery after the pandemic, the IMF still refers to the legal valuation status of Bitcoin as a significant risk to the market and could cause contingent liabilities.

This is not the first criticism the IMF has made of El Salvador regarding this approach.

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In July, the IMF told that making bitcoin a national currency was a very big step, citing price volatility and a lack of incentive to use it.

He told the fund at the time:

A crypto asset might spread as a way for people without bank accounts to make payments, but not to store value.

It will be instantly converted into real currency upon receipt.

Their criticism came along the same lines in today’s statement.

Where there was recognition of the El Salvador-run Chivo e-wallet as a tool for financial inclusion, the IMF was more interested in the Bitcoin ecosystem in which the country was involved.

What was stated in the statement is the following:

We urge the authorities to narrow the scope of the bitcoin law by removing the legal tender status of bitcoin.

In addition, the International Monetary Fund raised concerns about the risks associated with El Salvador’s bitcoin-backed bonds, with the International Monetary Fund body commenting on it by saying:

El Salvador is already moving forward with economic plans centered around these bonds, used to buy bitcoin and invest in infrastructure.

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The Salvadoran president does not care about the opinion of the International Monetary Fund:

The President of El Salvador, Nayib Bukele, is likely to ignore the allegations of the International Monetary Fund.

He has historically done so with his critics on social media, including the Bank of England, whose concern has been seen as a hoax.

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