IMF Urges El Salvador Again to Strengthen Regulatory Framework and Oversight of Bitcoin

The IMF has been asking El Salvador for changes regarding bitcoin since 2021, when the Central American country established it as a legal tender.

In its latest presentation on El Salvador, the IMF called for the country to also limit public sector exposure to bitcoin.

The International Monetary Fund (IMF) recommended on Thursday that El Salvador narrow the scope of the bitcoin law and strengthen the regulatory framework and oversight of the bitcoin ecosystem.

During a press conference, IMF spokesperson Julie Kozack also said that the IMF recommended El Salvador limiting public sector exposure to bitcoin, Reuters reported.

This isn’t the first time IMF has warned El Salvador. Most recently, in August, the IMF said something similar when it declared in a statement that “while many of the risks have not yet materialized, there is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project.” At that time, the IMF also said that “additional discussions in this and other key areas remain necessary.”

In fact, the back-and-forth history between El Salvador and the IMF over bitcoin goes back years. In November 2021, the IMF said that bitcoin should not be used as legal tender in El Salvador and urged the Central American country to strengthen the regulation and supervision of that ecosystem, something it called for again in January 2022.

El Salvador established bitcoin as legal tender in September 2021, being the first country to do so globally. Currently, it holds 5892 BTC, equivalent to about $345 million at today’s price.

Nayib Bukele, El Salvador’s president, recently said his plan to make the country a hotbed for the largest and oldest cryptocurrency has been “net positive” but adoption has fallen short of his expectations.

In Thursday’s presentation, the IMF positively highlighted Bukele’s budget for 2025, which expects the country to be debt-free.

CORRECTION (Oct. 3, 2024, 23:50 UTC): Fixes day of week in first paragraph.

Edited by Aoyon Ashraf.