IMF stands in the way of El Salvadorian Bitcoin (BTC) adoption

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Jun 11, 2021
  • The IMF has raised concerns about the financial and legal implication of El Salvador’s Bitcoin acceptance.
  • The country has proposed a bill that will make the cryptocurrency a legal tender.
  • If the Bitcoin law is passed, it will be on the same footing with the dollar, the country’s official currency.

The International Monetary Fund has faulted El Salvador’s decision to accept Bitcoin (BTC/USD) as a legal tender, explaining that there could be legal implications on the country’s decision.

A few days ago, El Salvador became the first country to accept Bitcoin as a legal tender, as President Nayib Bukele sted that its use can make it easier for El Salvadorians in the diaspora to send money back home.

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Gerry Rice, an IMF spokesperson, stated that the Adoption of Bitcoin can raise a lot of questions regarding legal, financial, and macroeconomic issues. The spokesperson added,

We are following developments closely, and we’ll continue our consultations with the authorities.

Foreign Investors back IMF

The IMF has also been encouraged by foreign investors in El Salvador to prevent the country’s Bitcoin adoption as a legal tender. They are worried that the situation in the country could ruin their chances and the discussions they are having with the international body, according to Citi’s Donato Guarino.

The Fund wants to meet with Bukele to talk about the Bitcoin law, as the country seeks a $1 billion program.

But Bukele has a major role to play regarding the fate of El Salvador when it comes to the acceptance of Bitcoin as a legal tender. It will depend largely on him to use his indisputable political capital to bring a large consolidated fiscal deficit into control, as some of the investors noted.

Bitcoin to have equal footing with the dollar

Presently, El Salvador uses the UD dollars as its legal tender and main currency. If the law on Bitcoin is passed, it would mean the cryptocurrency will be regarded in the same light as the dollars when it comes to making and receiving payments. All enterprises in the country will be legally allowed to accept and pay with Bitcoin.

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