The International Monetary Fund (IMF) has continued to question the viability of El Salvador's adoption of Bitcoin (BTC) as legal tender.
According to the IMF, the risks associated with El Salvador's adoption of Bitcoin have yet to materialize following minimal use of the cryptocurrency, noting that survey data and remittances support the concern, the agency saying in a blog post on February 10.
Interestingly, in the post, the IMF noted that the declaration of Bitcoin as legal tender could increase its use supported by factors such as new legislative reforms. The IMF also stressed the need for more transparency about government Bitcoin transactions.
โWhile the risks have not materialized due to the limited use of Bitcoin thus far, as suggested by survey and remittance data, its use could grow given its status as legal tender and new legislative reforms to encourage use. of crypto assets, including tokenized bonds (Digital Assets Law),โ the IMF said.
In addition, the IMF noted that there are still risks regarding financial integrity and stability, fiscal sustainability, and consumer protection. Therefore, the body has asked the government to address the concerns identified based on previous recommendations.
Concerns over Bitcoin adoption in El Salvador
In particular, El Salvador's decision to adopt Bitcoin as legal tender has received criticism and support from various stakeholders, and concerns have been raised about the country's economic stability and financial inclusion.
The government hopes that the Bitcoin adoption movement will lead to greater financial inclusion for its citizens, particularly those without access to traditional services. banking services. In this line, the head of the IMF, Kristalina Georgieva warned that despite the fact that digital currency is used for services similar to money, they should not be confused with coins.
Amid IMF concerns, an October 2022 report indicated that about 80% of citizens believed that the Bitcoin strategy had failed. In particular, El Salvador is moving forward with its Bitcoin adoption by focusing on support structures such as the establishment of mechanisms for mining operations.
El Salvador's economy expands
It is worth noting that despite initial predictions of the negative impact on El Salvador's economy from the Bitcoin decision, the country's economy expanded by almost 3% in 2022.
In general, the IMF has been among the biggest crusaders against the adoption of CRYPTOCURRENCIES by various jurisdictions, citing a number of concerns primarily around transparency. For example, like reported Per Finbold, the agency alleged that the use of digital assets was prevalent in rogue countries characterized by stricter capital restrictions.
