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IMF Pushes El Salvador to Rethink Bitcoin Policy
Last Updated: October 30, 2024
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Key Takeaways
- The IMF continues to warn El Salvador about financial and legal risks of Bitcoin as legal tender, urging the country to limit its exposure and implement stricter regulations;
- President Bukele remains committed to Bitcoin, downplaying IMF concerns and pushing forward with the plan;
- El Salvador’s Bitcoin law mandates businesses to accept Bitcoin if they have the means, and the government has heavily invested in Bitcoin purchases, indicating continued support despite mixed outcomes.
El Salvador's decision to make Bitcoin (BTC) legal tender continues to face criticism from the International Monetary Fund (IMF), which is asking the country to "limit public exposure" to the cryptocurrency.
El Salvador became the first country to make such a decision back in 2021. Since then, the IMF has been one of the loudest critics, warning of the financial and legal risks. During a press conference, IMF spokesperson Julie Kozack said the organization suggests the government reduce its use of Bitcoin and put stronger regulations in place.
In contrast, the IMF recently admitted that many of the risks it had predicted had not happened yet, but it still advises caution, Reuters reported on October 3.
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El Salvador's President Nayib Bukele, who led the move to adopt Bitcoin, has mostly ignored these warnings and even joked about them on social media.
Under El Salvador's Bitcoin law, businesses must accept the cryptocurrency if they have the technology to do so. The government has also spent a large amount of money buying Bitcoin.
However, in August, Bukele did acknowledge that the Bitcoin plan hadn't gone as well as expected. Despite this, he remains committed to it.
Though the IMF continues to urge El Salvador to reconsider its approach, the country seems determined to keep moving forward with its Bitcoin experiment.
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