IMF’s Advisory to El Salvador on Bitcoin Regulation
- The IMF urges El Salvador to minimize “public sector exposure to Bitcoin.”
- This recommendation follows earlier statements aimed at mitigating risks associated with Bitcoin.
The International Monetary Fund (IMF) has called on El Salvador to scale back the provisions of its Bitcoin legislation, emphasizing the need to restrict public sector involvement with the cryptocurrency.
Insights from IMF Spokesperson
During a press briefing, IMF spokesperson Julie Kozack stated:
“We recommend a reduction in the Bitcoin law’s scope, enhancing regulatory frameworks and oversight, and limiting public sector exposure to Bitcoin.”
Kozack added that discussions with El Salvador on addressing Bitcoin-related risks are ongoing.
Background on IMF’s Stance
The IMF’s position on El Salvador’s Bitcoin adoption dates back to 2021 when the country designated Bitcoin as legal tender. Following this decision, in November 2021, the IMF issued a statement advocating for modifications to the Bitcoin law while improving regulation and supervision.
In January 2022, the organization again suggested that El Salvador reconsider its position on Bitcoin as legal tender.
More recently, the IMF reiterated its concerns in an August statement, pinpointing the necessity to “mitigate the risks from Bitcoin.” While acknowledging that many anticipated risks have not yet arisen, the IMF stressed the importance of enhancing transparency in the Bitcoin sector.
El Salvador’s Continued Commitment to Bitcoin
Despite the IMF’s recommendations and ongoing dialogue, El Salvador maintains its dedication to advancing Bitcoin within its economy.
President Bukele’s Approach
While the government strives to boost Bitcoin adoption, Nayib Bukele, the president known for his pro-Bitcoin stance, acknowledges that further work is needed. In a recent interview with TIME magazine, he described the overall impact of his Bitcoin strategy in El Salvador as “net positive,” although it has not achieved the anticipated widespread adoption.
Nevertheless, Bukele remains committed, even purchasing additional Bitcoin during price dips. Furthermore, the country plans to use profits from its Bitcoin Trusts to finance the construction of 20 schools, aiming to make cryptocurrency more attractive to its citizens.