The IMF executive board advised El Salvador to stop using bitcoin as legal tender owing to the financial risks and obligations caused.
The proposal was made in a report released on Tuesday as a result of bilateral discussions concerning El Salvador‘s economy. According to the study, IMF directors “emphasized that there are significant risks associated with Bitcoin usage on financial stability, financial integrity, and consumer protection, as well as the accompanying fiscal contingent liabilities.”
“Some Directors voiced worry about the dangers connected with issuing Bitcoin-backed bonds,” according to the board of directors, who also “urged the authorities to reduce the scope of the Bitcoin law by eliminating Bitcoin’s legal currency status.”
El Salvador became the first country to recognize bitcoin as legal cash in September 2021, and its president, Nayib Bukele, has been an outspoken supporter of digital currency.
The proposal was made in a report released on Tuesday as a result of bilateral discussions concerning El Salvador’s economy.
According to the study, IMF directors “emphasized that there are significant risks associated with Bitcoin usage on financial stability, financial integrity, and consumer protection, as well as the accompanying fiscal contingent liabilities.”
“The directors also encouraged the authorities to limit the reach of the Bitcoin law by withdrawing Bitcoin’s legal currency status,” according to the statement. Some Board members were also concerned about the hazards of issuing Bitcoin-backed bonds.”
El Salvador became the first country to recognize bitcoin as legal cash in September 2021, and its president, Nayib Bukele, has been an outspoken supporter of digital currency.
This is a developing story that will be updated as more information becomes available.
