The International Monetary Fund, IMF, has requested El Salvador to reject Bitcoin’s status as legal tender. They made this call due to the significant risks that might appear regarding Bitcoin stability.
There have been a lot of discussions between the country of El Salvador and the International Monetary Fund. As a result, the IMF’s executive board published a report on El Salvador’s economy and the $1.3 billion loan negotiations. According to the report, there are significant risks using Bitcoin, emphasizing that it does not ensure financial stability, integrity, and the safety of consumers. In addition to these risks, the issue of bonds backed by cryptocurrency is also worth mentioning.
Analyzing all the disadvantages, the heads of the IMF asked the Salvadoran government to withdraw BTC’s legal currency status and restrict the scope of the Bitcoin Law. According to the research, there is a risk of possible liabilities if the crypto is not adequately regulated and supervised.
President Responds With Meme
Regarding the call towards El Salvador, its President Nayib Bukele responds funnily. It seems that the President is not taking the advice of IMF seriously. Per the record, from the beginning, El Salvadoran President has been a big proponent of Bitcoin. On Tuesday, on his official Twitter account, he released a GIF of Homer Simpson (labeled as the IMF). The GIF was titled “IMF, I see you. That’s very nice”.
https://t.co/s1F5kwOBEn pic.twitter.com/LD0I2dBHha
— Nayib Bukele 🇸🇻 (@nayibbukele) January 26, 2022
The Warnings of IMF
The International Monetary Fund has held a strong position against BTC from the outset. In early 2021, shortly after the country’s Bitcoin Law had been established, the IMF issued a similar warning as it currently did. Likewise, it involved the risks of using cryptocurrencies as legal cash in El Salvador.
Later in November, after the IMF finished its 2021 Article IV mission to El Salvador, it stated that it still had some concerns about the country. But unfortunately, the IMF’s approach to the Bitcoin issue doesn’t consider any of the implications in the industry. Instead, it only talks about a long list of superficial criticisms meant to spread FUD (Fear, Uncertainty, and Doubt) about the cryptocurrency market.
Nonetheless, despite repeated warnings from the IMF, El Salvador has continued with its intentions to integrate Bitcoin into the country’s economy.
In December 2021, Silvia Amaro, who works for CNBC, detailed various Bitcoin-related significant challenges identified by the IMF. Due to a lack of operational supervision, the IMF is worrying about the increasing interaction between social media influencers and cryptocurrency investors. This remains a concern because the influencers paid to promote a token do not do research. Therefore, these promotions could lead to people believing in scam tokens and losing their investments. Because of this, fraudsters may quickly pump and dump their victims’ money.