El Salvador’s adoption of the Bitcoin standard raised eyebrows at the International Monetary Fund (IMF), who cited a series of nebulous regulatory risks posed by the nation’s historic move on Thursday.
Per a Bloomberg report, IMF spokesman Gerry Rice said on Thursday that there are a number of ‘legal issues’ that require ‘careful analysis’ now that El Salvador has recognised bitcoin as legal tender.
Speaking in Washington, Rice said: “Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis so we are following developments closely and will continue our consultation with authorities. Crypto assets can pose significant risks and effective regulatory measures are very important when dealing with them.”
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An IMF team is conducting virtual meetings with El Salvador on its Article IV review of the country and a possible credit program “including policies to strengthen economic governance” Rice said.
Last week, El Salvador’s congress passed a historic law requiring businesses to accept Bitcoin in exchange for goods and services. President Nayib Bukele said the digital currency will help counter El Salvador’s low banking penetration and cut the cost of sending remittances.
As Bloomberg reports, the Head of Latin America Fixed Income Strategy at Amherst Pierpont lashed out against the move towards good money, saying:
“The plans for Bitcoin under an increasingly autocratic regime will likely only compound concerns about corruption, money laundering and the independence of regulatory agencies.”
Clearly, the IMF and its machinations are displeased to not be involved in El Salvador’s monetary future. The same cannot be said for the people of El Salvador, however.
Since Bitcoin became legal tender, at least four more countries are tabling bills to take the same route, namely Paraguay, Panama, Mexico and Venezuela.
The most likely country in Europe which would take the leap is the small island nation of Malta, which has been at the forefront of Bitcoin adoption since 2018.
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