IMF Presses El Salvador to Withdraw Bitcoin’s Legal Tender Status

The International Monetary Fund’s governing committee advised that El Salvador cease using bitcoin (BTC) as legal cash owing to the financial hazard and obligations caused. Following an annual discussion, IMF board members “tried to persuade the authorities to reduce the extent of the Bitcoin legislation by eliminating bitcoin’s legal currency status.”

According to the IMF, several board members expressed worry about the dangers involved with El Salvador’s anticipated sale of bitcoin-linked debt. The advice was included in a report released on Tuesday as a result of bilateral negotiations with El Salvador concerning the country’s economy. El Salvador has been negotiating a $1.3 billion bailout with the IMF.

As per the study, IMF directors “emphasized the significant risks linked with bitcoin usage on economic stability, fiscal responsibility, and consumer safety, and also the accompanying fiscal obligations.” Additionally, directors “compelled authorities to redefine the extent of the Bitcoin Law by eliminating bitcoin’s legal tender standing. Additionally, multiple directors raised worry about the dangers linked with the issuance of bitcoin-backed notes.”

In November, IMF officials said that bitcoin should not be used as legal cash in El Salvador and advised the Central American nation to tighten its newly developed crypto payment ecosystem’s regulation and oversight. El Salvador legalized bitcoin last September 2021, and the country’s president, Nayib Bukele, has been a prominent supporter of the crypto.

The nation has been amassing bitcoin and purchased 410 more Bitcoin in recent times, bringing its total holdings to well over 1,500 BTC. El Salvador also intends to sell $1 billion worth bitcoin bonds in 2022. The bond will have a ten-year maturity and will be priced in US dollars.