IMF recommends El Salvador not use bitcoin as legal tender

IMF recommends El Salvador not use bitcoin as legal tender

MEXICO CITY - The International Monetary Fund (IMF) on Monday said El Salvador should not use bitcoin as legal tender, considering risks related to the cryptocurrency. "Given bitcoin's high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability," the IMF said in its staff concluding statement of the 2021 Article IV mission to El Salvador. "Its use also gives rise to fiscal contingent liabilities." The IMF regularly undertakes Article IV missions to member countries to consult with government officials before they request to use IMF resources. In September, El Salvador became the first country to adopt bitcoin as legal tender, alongside the U.S. dollar. "Because of those risks, bitcoin should not be used as a legal tender. Staff recommends narrowing the scope of the bitcoin law and urges strengthening the regulation and supervision of the new payment ecosystem," said the IMF. The IMF statement came only two days after President Nayib Bukele announced El Salvador was planning to build the world's first "bitcoin city", which will be funded initially by bitcoin bonds. Bukele said the city would get its energy supply from a volcano and would not levy any taxes