The International Monetary Fund (IMF) has responded to criticism of El Salvador’s decision to accept bitcoins as legal tender, saying the move is likely to lead to unforeseen economic risks and regulatory complications.
According to a statement from IMF spokesman Gerry Rice, the adoption of BTC as legal tender in the country could cause complicated legal, financial and macroeconomic problems. Rice said the IMF was closely monitoring developments in the area of legal tender in order to carry out a proper and careful analysis, followed by consultation with the relevant authorities.
“Cryptocurrencies can pose significant risks and effective regulatory measures are very important in addressing them.”
The IMF wants to oversee the BTC adoption process in El Salvador
President Nayib Bukele has only recently announced the adoption of BTC as official and legal tender in the country, but the IMF has already set up a team to review the matter. The review includes a potential credit program and other policies to strengthen the country’s economic governance.
As a result of recent developments, the crypto community has responded positively to support El Salvador’s decision to accept BTC as the official currency and to use geothermal energy for BTC mining farms. The community also criticizes the IMF for trying to interfere in the BTC adoption process. One of the blockchain developers, Dan Held, said:
“El Salvador will not be the only country to make BTC legal tender”
As previously reported, the use of BTC as legal tender has been approved to allow individuals, public and private entities to trade in bitcoins without any restrictions. This will make it much easier for businesses to use bitcoins as a means of currency for goods and services.
According to President Nayan Bukele, the move will help improve the country’s underdeveloped banking situation and also reduce the cost of sending remittances. Bukele also announced the country’s support for BTC farms that could generate and use clean, renewable and affordable electricity produced from the country’s geothermal energy.
Is the IMF afraid of the possible impact of BTC on other developing countries?
As one Twitter user well noted, the IMF might fear that BTC would make its operations in El Salvador and other similar developing countries obsolete. The main argument is that the IMF and bitcoins share three main goals in these developing countries, namely to oversee economic development, support capacity building and reduce global poverty.
In addition, we all know very well that the IMF offers and lends to these countries, and once the bitcoins are used massively here, this revenue channel may eventually dry up completely.
“The lending area – this is where the IMF could have a problem – will no longer be able to exploit the country.”
While this argument is in line with BTC’s goal of decentralizing the entire global structure, including the financial sector, there are also legitimate concerns about the volatility of bitcoins and the huge impact of whales on the crypt market. These two factors are, of course, a well-founded concern, especially after the recent “fads” of SpaceX and Tesla CEO Elon Musk, who waved sharply at the cost of BTC and other cryptocurrencies.