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IMF Calls for El Salvador to Drop Bitcoin as Legal Lender Over Financial Risks

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Coin with the bitcoin symbol and the text "El Salvador republic" in spanish. 3d illustration.

The International Monetary Fund (IMF) urges El Salvador to stop recognition of Bitcoin as a legal tender in the country, as prices for digital coins struggled through a tough patch.

Source: FT

BTC USD up +2.79%

In September, El Salvador become the first country in the world to make Bitcoin a legal tender under a program spearheaded by Nayib Bukele.

In a statement, executive directors from the IMF raised concerns about El Salvador seeking more than $1billion in financing.

The directors emphasized that there are huge risks to financial stability, financial integrity, consumer protection, and related fiscal contingent liabilities, all related to the use of Bitcoin.

Bukele has spent tens of millions of public dollars purchasing the cryptocurrency and losing money. He bought again last week even as the price of the Bitcoin crashed to a six-month low.

El Salvador’s talks with the IMF have shown small signs of progress, and concerns about the government’s financing plan have weighed on the country’s bonds, among the worst performers last year.

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