• The International Monetary Fund (IMF) has expressed concern over El Salvador’s decision to make bitcoin legal tender.
• The IMF has warned of the risks associated with bitcoin use and requested transparency from the Central American nation.
• Despite its warnings, the IMF has admitted that nothing negative has yet happened and will be keeping an eye on El Salvador’s behavior in regards to cryptocurrency.
El Salvador Declares Bitcoin Legal Tender
In September 2021, El Salvador made history by becoming the first nation to declare bitcoin as legal tender. This meant that businesses within the country were required to accept both USD and BTC for goods and services.
The IMF’s Concerns
The International Monetary Fund (IMF) expressed concerns about this move, citing speculative nature of crypto markets and fiscal fragility as potential issues arising from El Salvadors embrace of bitcoin. They urged the Central American nation to reconsider their plans, but ultimately accepted that nothing had yet come of it.
BTC Reaches All-Time High
Two months after declaring BTC legal tender, the asset reached a new all-time high at around $68,000 per unit. At time of writing it is now around $21,000 per unit – a significant drop in value since its peak in 2021.
IMF Plans To Monitor El Salvador Closely
Despite their initial warnings, the IMF remains open minded about El Salvador’s stance on cryptocurrency and will be monitoring their usage closely going forward. In addition they also predict that tokenized bonds based on BTC could be available soon given how strict regulations have become in regards to digital assets within this nation.
El Salavador’s decision to declare Bitcoin as legal tender was met with much criticism but despite this they have held firm in their stance while still maintaining close relations with organizations such as the IMF who are willing to keep an eye on them as they continue down this route.