IMF asks El Salvador to limit the scope of the Bitcoin law and limit public awareness
The International Monetary Fund (IMF) has once again expressed concerns about El Salvador’s extensive involvement in Bitcoin. The topic was discussed by IMF spokesperson Julie Kozack during a press conference on Thursday. The organization has consistently warned the country about the risks of crypto activity, given the volatile nature of virtual digital assets. Currently, the IMF is working with the Financial Stability Board (FSB) to craft a comprehensive regulatory framework that could manage the multiple scenarios related to crypto activities.
According to Kozack, the IMF has urged El Salvador to limit people’s exposure to Bitcoin. The organization has been asking the government to rein in its crypto policy for the past three years, since it was declared legal tender in El Salvador in 2021 alongside the US dollar.
“What we recommended is narrowing the scope of the Bitcoin law, strengthening the regulatory framework and oversight of the Bitcoin ecosystem, and limiting public sector exposure to Bitcoin,” Kozack said. said in response to a question.
After legalizing the use of Bitcoin in 2021, El Salvador has taken several other steps to make the oldest and most expensive cryptocurrency an integral part of its economy. Salvadoran President Nayib Bukele is an outspoken supporter of Bitcoin.
From approving crypto companies to setting up operations in the country, Bukele is spearheading the creation of a ‘Bitcoin City’ that is expected to become a tax-free haven for miners with access to renewable volcanic energy. The Salvadoran president also approved Bitcoin bonds so that the country can raise capital to pay the country’s debts.
in April, an IMF official sent a new warning to Bukele about the institute’s concerns about the financial risks associated with Bitcoin.
On Friday, Bitcoin was trading at $61,400 (approximately Rs. 51.5 lakh). Last year, when Bitcoin was trading around $29,449 (approximately Rs. 24.5 lakh), El Salvador recorded an 18 percent decline in BTC-based remittances.
Due to El Salvador’s continued involvement in Bitcoin, the IMF has reportedly withheld financial support worth $1.4 billion (approximately Rs. 11,754 crore) that El Salvador needs to expedite national debt payments and other financial obligations.
IMF official Tobias Adrian posted outlined the financial body’s concerns about crypto in February.
“The uneven growth of crypto markets around the world means that the challenges regulators face are different. At the same time, the ability of regulators to monitor and respond to the risks generated by crypto markets is also different,” he said.
