Following a recent visit, the IMF has advised El Salvador to “reconsider” its intentions for using Bitcoin. Due to the “speculative nature” of the cryptocurrency markets, the worldwide monetary audit organization has recommended El Salvador to be cautious when increasing government exposure to them.
The International Monetary Fund (IMF) stressed in a statement on February 10 that El Salvador’s usage of Bitcoin is “limited” and as a result, the dangers associated with it have “not materialized” yet. Recently, IMF personnel visited the nation.
The IMF Addresses its Concern Over Illegal Activities
El Salvador should address the threat posed by Bitcoin to its financial stability, consumer protection, and budgetary viability, according to the IMF. The IMF emphasized the need of being aware of these hazards since, given that it has been accepted as legal cash in El Salvador since September 2021, its usage there “may rise.”
El Salvador was advised to reconsider its intention to issue tokenized bonds after the IMF indicated that it should be “eschewed” because of the risks it poses in terms of both law and money.
The Government of El Salvador’s Project, “Bitcoin City”, is Intended to Help with the Development
The Salvadoran government’s need for “more openness” was also underlined in relation to its Bitcoin transactions and the “financial status” of its state-owned Chivo wallet. This follows recent reports that on January 11, a legal foundation for El Salvador’s “Volcano bond“, a Bitcoin-backed bond, was developed.
According to the Salvadoran government, these bonds would be used to reduce the nation’s debt as well as finance the development of its envisioned “Bitcoin City“. El Salvador’s strategy to continue drawing in cryptocurrency investors includes Bitcoin City. It was previously mentioned that the nation will make stopping any potential cryptocurrency-related criminal behavior a top priority in 2023.
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