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IMF Keeps Opposing El Salvador’s BTC Revolution

IMF Keeps Opposing El Salvador’s BTC Revolution

The International Monetary Fund (IMF) is still criticizing the decision by El Salvador to adopt BTC as a legal currency, harping on matters of ‘consumer risk.’ 

BTC Legalized Despite IMF Opposition

In early 2021, when El Salvador had just passed its historic Bitcoin Law, signaling a new era in the remittance-dependent country, the IMF had a predictable reaction of opposing its prospects. Yet, despite its multiple warnings against the so-called risks of a BTC-legalized financial system, El Salvador had powered through with its plan. The country has launched its Bitcoin-powered Chivo Wallet app as well as established multiple ATMs to facilitate daily transactions and remittance transfer in Bitcoin. 

IMF Continues Putting Up Road Blocks

It seems, however, that the IMF is determined to stubbornly hold on to its antiquated fears against BTC. On Monday, the council released a concluding statement of the 2021 Article IV mission to El Salvador, further emphasizing its notions of danger in BTC legalization. The Article IV mission is undertaken with the intention of consulting with the government officials of member countries that have requested to use IMF resources. 

The statement does acknowledge that cryptocurrencies could make payment systems more efficient. However, it completely overrides the benefits of the system by refusing to keep an open mind to the nuances of the industry. Instead, the IMF has only been focusing on a laundry list of run-off-the-mill critiques. 

"Given bitcoin's high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to fiscal contingent liabilities. Because of those risks, bitcoin should not be used as a legal tender. Staff recommends narrowing the scope of the bitcoin law and urges strengthening the regulation and supervision of the new payment ecosystem.”

President Still Very Much Pro-BTC

The statement comes on the tail end of El Salvador President Nayib Bukkele’s announcement of a crypto-funded and geothermal-powered ‘Bitcoin City.’ Last week, the President announced his plans of channeling the funds from crypto-backed bonds into the development of a zero-tax township at the base of the Conchagua volcano, featuring commercial and residential areas, entertainment venues, restaurants, an airport, and other amenities common to a modern metropolis. Commenting on the IMF’s latest statement, President Bukkele tweeted, 

"Although we obviously do not agree on some things, such as the adoption of Bitcoin, the analysis it makes of our country is interesting."

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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