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El Salvador last year demanded a $ 1.3bn loan from the International Monetary Fund, but negotiations were halted by concerns of a Bitcoin lender.
The International Monetary Fund has urged El Salvador to strip Bitcoin of its status as a legitimate currency due to its high risks, which highlight a major obstacle to the country’s access to credit to the institution.
El Salvador last year demanded an $ 1.3 billion IMF loan, but negotiations were halted by Bitcoin concerns over the lender, and every deal must be approved by the board.
IMF senior officials, representing the 190-nation fund, highlighted the dangers of Bitcoin “economic stability, financial integrity, and consumer protection” and financial debt, the fund said Tuesday. They urged government officials to “reduce the size of Bitcoin laws by removing the legal validity of Bitcoin.”
Some executives also expressed concern over the risks associated with issuing Bitcoin-backed bonds, the fund said. The comments came in the wake of Central America’s discussions on the annual financial review of Article IV.
El Salvador in September formulated a cryptocurrency exchange with the US dollar, which made 40-year-old President Nayib Bukele a popular figure among crypto lovers. El Salvador is the only country that has adopted Bitcoin as a viable alternative.
The country started buying Bitcoin last year when it traded for about $ 50,000 and bought at least 1,801 currencies. It is down 45% from a peak of about $ 68,000 in early November, meaning the country lost about $ 20 million, according to a Bloomberg News census.
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