IMF Urges El Salvador To Remove Bitcoin As Legal Tender

IMF on Tuesday urged El Salvador to reverse course and stop using Bitcoin as legal tender, citing the “significant risks” posed by the cryptocurrency.

In September, the small Central American country became the first in the world to embrace digital money, allowing consumers to use it in all transactions alongside the US dollar.

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The staff of the Washington-based crisis lender had previously urged President Nayib Bukele’s government to reconsider the move, but the board, which is made up of representatives from IMF member governments including the United States, used far harsher language.

According to an IMF statement, the directors “urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.”

The officials “emphasized that there are significant risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection” as well as the issuance of Bitcoin-backed bonds.

The fund supported the goal of “boosting financial inclusion,” which could be achieved through the country’s “Chivo” e-wallet, but warned about the cryptocurrency’s high levels of volatility.

Bitcoin was trading at around 37,000 to the US dollar on Tuesday, having lost roughly half its value since hitting a high of 67,734 in November.

Bukele took advantage of price drops to purchase the country’s digital asset.