Skip to main content

IMF Warns El Salvador Against Using Bitcoin as Legal Tender After ‘Bitcoin City’ Announcement

IMF Warns El Salvador Against Using Bitcoin as Legal Tender Following 'Bitcoin City' Announcement

The International Monetary Fund (IMF) has warned El Salvador against using bitcoin as legal tender due to various risks associated with cryptocurrency. The warning came one day after Salvadoran President Nayib Bukele announced his plan to build a “bitcoin city” powered by a volcano and financed by bitcoin bonds.

IMF Says El Salvador Shouldn’t Use Bitcoin as Legal Tender

The International Monetary Fund (IMF) warned El Salvador on Monday that the country should not use bitcoin as legal tender, citing various risks associated with the cryptocurrency.

El Salvador is the first country in the world to adopt bitcoin as legal tender alongside the U.S. dollar which it has used for two decades. The country’s bitcoin law went into effect in September. Furthermore, El Salvador has purchased 1,120 BTC, according to Salvadoran President Nayib Bukele.

The IMF regularly undertakes Article IV missions to member countries to consult with government officials before they request to use its resources. The IMF explained that for El Salvador, “The adoption of bitcoin as legal tender, the regulation and supervision of bitcoin services providers, and e-wallet Chivo were also discussed.”

In its “Staff Concluding Statement of the 2021 Article IV Mission” for El Salvador, the IMF detailed:

Given bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to fiscal contingent liabilities. Because of those risks, bitcoin should not be used as a legal tender.

The IMF proceeded to recommend “narrowing the scope of the bitcoin law” and urged El Salvador to strengthen “the regulation and supervision of the new payment ecosystem.”

The recent statement from the IMF came one day after President Bukele announced a plan to build the world’s first bitcoin city powered by a volcano and financed by bitcoin bonds. He noted there would not be any taxes in the bitcoin city except for value-added tax (VAT).

“The plans to issue sovereign bonds and use the proceeds to buy bitcoin and fund infrastructure plans announced on November 20, occurred after the technical work of the mission concluded, and were not discussed with the authorities,” the IMF clarified.

Commenting on the IMF’s statement, Bukele said:

Although we obviously do not agree on some things, such as the adoption of bitcoin, the analysis it makes of our country is interesting.

What do you think about the IMF advising El Salvador against using bitcoin as legal tender? Let us know in the comments section below.



from Bitcoin News https://ift.tt/3cE2pMA
Labels:

Comments

Post a Comment

Popular posts from this blog

Deep Web Roundup: Dream Adds Monero and Bitcoin Tumbler “Chip Mixer” Launches

The darknet has been quiet of late, which is the way it’s meant to be. No news means no mega busts, honeypots, or mass market shutdowns. Even when it’s out of the spotlight though, the deep web is quietly making news, whether trialling the latest privacy coins or the newest coin mixers that promise to restore a little of the privacy that’s being stripped away from bitcoin users on a daily basis. Also read: U.S. Agency ICE Conducts Investigations That Exploit Blockchain Activity The Battle for Privacy Heats Up Privacy is all relative, but of late there’s been relatively little privacy to be enjoyed by bitcoin users. Blockchain monitoring software is becoming more sophisticated and more common, with U.S. law enforcement agencies using it to profile and hunt down deep web users. Chip Mixer is a relatively new bitcoin tumbler that’s designed to restore some of that privacy. Available on both the clearnet and darknet, the service uses a variety of techniques to obfuscate blockchain m...
10 comments
Read more

Ombudsman Receives Complaints About Crypto Investments in Spain

The Spanish ombudsman has been receiving complaints about cryptocurrency and how some Spanish citizens investing in these vehicles have lost everything. In his annual report, Angel Gabilondo recognized the rise of cryptocurrencies as a new problem due to the little or no regulation crypto sees in the country. In the same way, the EU has also warned about these assets recently. Spanish Ombudsman Gives His Take on Crypto Angel Gabilondo, the Spanish ombudsman, has given his take regarding cryptocurrencies and the effects they have on citizens investing in some of these projects. Gabilondo said in his yearly report that cryptocurrencies have become “a new problem” during the year examined, with many people having lost all of their funds invested. The report states : Cryptocurrency exchange companies or platforms are not regulated in the legal system, are not subject to any public supervision system, nor do they benefit from deposit guarantee systems. The affected users that sought...
Post a Comment
Read more

2021 Bitcoin Price Predictions: Analysts Forecast BTC Values Will Range Between Zero to $600K

As bitcoin has touched new price highs on Thursday nearing the $50k handle, people have been curious as to where the price will go in the future. Meanwhile, despite the gains so far, a number of luminaries, analysts, executives, and proponents from the crypto space believe the leading crypto asset will reach between $60k to six-digits this year. Mike Novogratz Predicts $100K Bitcoin: ‘Other CFOs and CEOs Are Saying, What Should We Be Doing?’ Satoshi Nakamoto’s invention has gained mass appeal in recent times as the leading digital asset bitcoin ( BTC ) has reached its highest value ever in 2021. On Thursday morning (EST), BTC spiked to an all-time high (ATH) at $48,697 per unit. Earlier in the morning at around 2 a.m., bitcoin was exchanging hands for $44,485 and saw an 8.98% increase since then. At the time of publication, at 6:30 p.m. (EST) on February 11, 2021, bitcoin (BTC) is swapping for $47,821 per coin. With BTC so close to the $50k mark, people have been forecasting ...
Post a Comment
Read more