IMF urges El Salvador to remove Bitcoin's status as legal tender

Members of the enforcement committee astatine the International Monetary Fund are urging lawmakers successful El Salvador to nary longer admit Bitcoin arsenic ineligible tender.

The IMF reported connected Tuesday that though integer payments had the imaginable to summation fiscal inclusion successful the Central America nation, the usage of Bitcoin (BTC) arsenic ineligible tender carried “large risks” related to fiscal stability, fiscal integrity, and user protection. The enforcement committee directors urged El Salvador authorities to “narrow the scope of the Bitcoin instrumentality by removing Bitcoin’s ineligible tender status,” besides expressing interest astir the imaginable risks of issuing Bitcoin-backed bonds.

The officials’ proposal came pursuing the decision of an Article IV consultation successful El Salvador. According to the IMF, during specified a consultation a squad of economists visits a state “to measure economical and fiscal developments and sermon the country's economical and fiscal policies with authorities and cardinal slope officials.”

Prior to the implementation of El Salvador’s Bitcoin Law successful September 201, IMF officials warned that immoderate of the consequences of a state adopting BTC arsenic a nationalist currency “could beryllium dire,” including the hazard of having home prices becoming highly unstable, and assets being utilized contrary to Anti-Money Laundering and combating the financing of coercion measures. The IMF has antecedently issued statements to tiny nations considering adopting crypto, claiming to bash truthful would “raise risks to macroeconomic and fiscal stableness arsenic good arsenic fiscal integrity.”

Since the Bitcoin Law went into effect successful September, El Salvador President Nayib Bukele has utilized his Twitter relationship to announce respective BTC buys totaling 1,801 BTC — worthy astir $67 cardinal astatine the clip of publication. The latest acquisition of 410 BTC came arsenic the terms of the crypto plus dropped beneath $37,000 for the archetypal clip since July 2021.

— Nayib Bukele (@nayibbukele) January 21, 2022

Cointelegraph reported connected Jan. 14 that El Salvador’s designation of BTC arsenic ineligible tender whitethorn beryllium impacting the country’s sovereign recognition outlook, according to Moody’s Investors Service. Analyst Jaime Reusche reportedly said that Bitcoin “certainly adds to the hazard portfolio” of a state that has struggled with liquidity issues. 

According to information from Cointelegraph Markets Pro, the terms of Bitcoin is $36,550 astatine the clip of publication, having fallen much than 12% successful the past 7 days. The crypto plus concisely dipped to the $33,000s yesterday earlier returning to the $36,000s.