- In a recent statement published by the International Monetary Fund, Bitcoin's price volatility poses significant risks to El Salvador's economy.
- The IMF says using Bitcoin as legal tender negatively impacts consumer protection, financial integrity, and financial stability in El Salvador.
- The IMF recommends that El Salvador narrow the scope of the Bitcoin law for its growth and financial inclusion.
The IMF has warned El Salvador against the negative impact of Bitcoin adoption on its economy. The international organization suggests that El Salvador bolster regulation to protect its consumers.
IMF asks El Salvador to close its $150 million funds that facilitates Bitcoin to USD conversion
The International Monetary Fund (IMF) has recommended that El Salvador stop using Bitcoin as legal tender due to financial and consumer risks.
The IMF's concluding statement reads,
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.
El Salvador has welcomed financial inclusion through Bitcoin adoption; however, the IMF believes that the country should narrow the scope of Bitcoin law. Bolstering crypto regulation and increasing oversight of payment systems could help in mitigating associated risks.
Additionally, the organization recommends that El Salvador close its $150 million trust fund that facilitates Bitcoin to USD conversion. The IMF believes that prompt measures could safeguard users with exposure to Bitcoin.
Nayib Bukele, President of El Salvador, reacted to IMF's recommendation,
The IMF just published its technical evaluation of El Salvador for the year 2021. And although obviously, we don't agree with some things, like the adoption of Bitcoin, their analysis of our country is interesting.
FXStreet analysts have evaluated the Bitcoin price trend and predicted that BTC is heading south, collecting liquidity. Analysts have set a target of $53,000 for BTC price.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.