The International Monetary Fund (IMF) has advised El Salvador to narrow the scope of its bitcoin law, strengthen regulation and oversight of the cryptocurrency, and limit public sector exposure. The IMF remains engaged with the country to support reforms and ensure bitcoin adoption does not threaten financial stability.
IMF Urges El Salvador to Tackle Bitcoin Risks Amid Reform Talks
The International Monetary Fund highlighted that bitcoin continues to be a central point in ongoing discussions with El Salvador regarding its economic reform program on Thursday. The IMF emphasized the need to manage risks tied to the nation’s adoption of bitcoin, which has played a significant role in its financial landscape since 2021.
IMF spokesperson Julie Kozack noted during a scheduled press conference:
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What we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting public sector exposure to bitcoin.
Kozack also pointed out that El Salvador’s proposed 2025 budget is a positive step toward improving its public finances, though it requires strong implementation to be effective. The IMF continues to engage with El Salvador as part of broader efforts to solidify reforms while ensuring that the adoption of bitcoin does not undermine financial stability. Talks between the two parties focus on strengthening reforms and addressing risks linked to cryptocurrency use in the country.
In September 2021, El Salvador became the first country to adopt bitcoin as legal tender alongside the U.S. dollar. Key initiatives include the Chivo Wallet app and the proposed Bitcoin City, a tax-free hub powered by geothermal energy. In December 2023, the country’s bitcoin “Volcano Bonds” were approved.
The IMF has consistently warned El Salvador about making BTC legal tender. However, the country, led by the pro-bitcoin president Nayib Bukele, has stood firm on its bitcoin policy. Since 2021, El Salvador has been steadily increasing its bitcoin holdings, purchasing 1 BTC per day since late 2022. As of 2024, the country holds approximately 5,865 BTC, valued at over $356 million.
Source: https://news.bitcoin.com/imf-urges-el-salvador-to-tighten-bitcoin-law-and-strengthen-oversight/