The IMF Urges El Salvador to Stop Using Bitcoin as a Legal Tender

El Salvador Via Unsplash - Esaú González
El Salvador Via Unsplash - Esaú González

The International Monetary Fund is demanding El Salvador not to use Bitcoin as a legal tender, arguing that there is a major risk associated with the cryptocurrency.

In a report that the IMF released on Tuesday, the organization explained its stance on why the Central American nation should narrow the scope of Bitcoin Law. The latter was passed in June 2021.

In the report, IMF said that using Bitcoin as a legal tender “entails large risks for financial and market integrity, financial stability, and consumer protection, it also can create contingent liabilities.”

Signup for the USA Herald exclusive Newsletter

The directors of the IMF also asked for stricter regulation for Chivo, the official e-wallet of El Salvador. The organization cited risks associated with issuing Bitcoin-backed bonds. 

The IMF called the nation for “rebounding quickly” arguing that the large public debt-to-GDP ratio has grown in the country. It also urged El Salvador to reinforce its anti-corruption and anti-money laundering, to be in sync with the global standards.