The IMF has called on El Salvador to limit its exposure to Bitcoin and strengthen its regulatory framework.
The International Monetary Fund (IMF) has once again urged El Salvador to take steps to limit its exposure to Bitcoin, strengthening the country's regulatory framework and oversight of its Bitcoin ecosystem. This follows El Salvador's 2021 decision to make Bitcoin legal tender, becoming the first country in the world to do so. The IMF has consistently raised concerns about the "risks" involved in this move, citing potential financial and legal issues.
During a recent press conference, IMF spokesperson Julie Kozack reiterated the organization's stance, emphasizing the need to narrow the scope of El Salvador’s Bitcoin law. "What we have recommended is a narrowing of 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, according to Reuters.
This latest recommendation from the IMF is part of an ongoing dialogue between the organization and El Salvador. Since the adoption of Bitcoin as legal tender, the IMF has been vocal in its criticism, warning of potential macroeconomic risks. However, in a statement issued in August, the IMF acknowledged that many of the risks associated with Bitcoin adoption had not yet materialized. Despite this, the IMF continues to advocate for caution and additional regulatory measures.
El Salvador currently holds approximately 5,892 BTC, valued at around $345 million at current market prices. President Nayib Bukele, a strong advocate for Bitcoin, has promoted the country as a hub, although he recently admitted that the adoption has not met his initial expectations. Nevertheless, Bukele remains positive about the impact of Bitcoin on the country’s economy.
The IMF has not been the only institution expressing concern. Since El Salvador’s decision in 2021, various global financial bodies have voiced skepticism, warning that the move could create instability. Despite these warnings, Bukele has continued to champion Bitcoin, even using social media to mock the IMF’s concerns.
Looking forward, the IMF has stated that it will continue working with El Salvador, urging the country to focus on limiting public sector exposure to Bitcoin while strengthening regulations. Meanwhile, President Bukele’s government is preparing its 2025 budget, which aims to make the country debt-free. The implications of this ongoing experiment with Bitcoin remain closely watched by global financial markets.
