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El Salvador rejects IMF’s proposal to remove Bitcoin as a legal tender

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TL;DR Breakdown

  • El Salvador Finance minister firmly dismissed IMFs bid to drop Bitcoin as a legal tender.
  • The IMF stated that Bitcoin could cause financial instabillity, amongst others.

El Salvador is on the radar once again following concerns by the IMF about the possible economic risks of using Bitcoin as a legal tender. This came just after the IMF released a press statement urging the Central American nation to drop BTC as legal tender. In the statement, the board of executives raised concerns such as consumer protection issues, integrity, financial stability, and the associated fiscal contingencies.

However, the Finance Minister of El Salvador, Alejandro Zelaya, dismissed the proposal by the IMF stating that they won’t be stopped by the international organization regarding the use of Bitcoin in the country. He added that the country had measures that ensure crypto-related activities within the nation comply with all financial transactions and money laundering regulations. Zelaya further added that Bitcoin issues sovereignty; hence countries are sovereign and they take sovereign choices about making public policies.

El Salvador president’s belief in Bitcoin

In 2021, El Salvador’s president Nayib Bukele recognized Bitcoin as a legal tender, thereby making his government the first to adopt Bitcoin as a legal tender. President Nayib Bukele recently announced a plan to build an oceanside Bitcoin City at the base of a volcano. As a result, there arose a distress call among policymakers who thought the idea of making Bitcoin a legal tender could expose the nation to certain risks like financial instability.

With the growing popularity of cryptocurrency, several countries have currently adopted digital assets into their economy. Looking at the European business review, Vietnam, India, and Pakistan have greatly adopted the cryptocurrency legal status into their economy, emerging as the top 3.

President Nayib Bukele dismissed the claims by the IMF regarding BTC’s legal status alongside the USD. He further added that with the growing demand for BTC, the crypto is likely to gain more value in the coming years. Earlier in January, President Bukele predicted that Bitcoin will reach $100,000 this year, adding that two more countries might join the league to accept Bitcoin as a legal tender.

Currently, no other leading economy has adopted Bitcoin as a currency. However, depending on President Bukele’s success, there could be other countries interested in introducing Bitcoin as a legal status.

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