IMF sounds ‘legal, economic’ alarms over El Salvador’s Bitcoin adoption

The International Monetary Fund (IMF), a global, intergovernmental economic and financial body, condemned El Salvador’s move to make Bitcoin an official ‘legal tender’ in the country citing economic and legal risks.

“Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis,” said Gerry Rice, an IMF spokesman, during a press meeting.

Rice added the IMF was monitoring developments “closely” and would continue to consult authorities about possible implications.

When El Salvador legalized Bitcoin

El Salvador made history earlier this week after its national Congress passed a Bitcoin bill, making the decade-old cryptocurrency a legal tender in the country—one that can be used alongside the US dollar to pay for goods and services, clear debts, and remittances.

President Nayib Bukele later announced the state was launching Bitcoin mines powered by geothermal energy sourced from volcanic sites to ensure a cleaner, greener, source of producing the asset.

But bodies like the IMF don’t seem impressed. They have spent years challenging the overall need and rise of cryptocurrencies, and instead focused on the creation of state-backed digital currencies (which are effectively centralized).

Development is “noise”

Foreign investors and banks have sided with the IMF in this regard as well. Some have demanded increasingly higher premiums to hold Salvadoran debt, while others like Citibank describe the Bitcoin development as “noise” that spoils the IMF’s ongoing efforts to help the Salvadoran economy.

“Crypto is a very marginal story to the Salvadoran investment thesis,” said Patrick Esteruelas, research head at Emso Asset Management in New York.

He added, “Whether El Salvador is going to be attractive (for investors) or not is going to depend on Bukele’s ability to use his unquestionable political capital to bring a large consolidated fiscal deficit into control.”

Not everyone is against El Salvador and Bukele, however. This week saw neighbouring Mexico and Panama, and South American country Paraguay jump on the Bitcoin train as well—local politicians confirmed their interest about integrating the asset in a bigger manner within their economy, with some even switching their Twitter profiles to display the laser eyes meme.

Get an edge on the cryptoasset market

Access more crypto insights and context in every article as a paid member of CryptoSlate Edge.

On-chain analysis

Price snapshots

More context

Join now for $19/month Explore all benefits

Like what you see? Subscribe for updates.

Source link

Latest articles

Community reacts after Dfinity token ICP loses 80% of its value since May

A little over a month ago, crypto enthusiasts woke to a new project on the top 10 rankings of cryptocurrencies by...

Despite the fear, this on-chain proponent expects EOY Bitcoin price of $300,000

Despite the fear, this on-chain proponent expects EOY Bitcoin price of $300,000 Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR,...

All these Latin American countries want to adopt Bitcoin…and quick

Mexican senators, Eduardo Murat Hinojosa and Indira Kempis, may have a lead in the Bitcoin (BTC) legalization race, but there is...

Dutch economic advisor calls for a Bitcoin ban even as Central America is adopting the asset

An official of the Central Planning Bureau (CPB), an independent, publicly financed policy arm that advises the government of the Netherlands,...

Related articles

Leave a reply

Please enter your comment!
Please enter your name here