The International Monetary Fund (IMF) has reiterated its position on El Salvador’s bitcoin (BTC) experiment. El Salvador became the first nation to adopt BTC as a legal tender in 2021 and has since been buying up on more supply.
The recent crypto market crash prompted the country into another buying frenzy, bringing the total supply of crypto to some 1,800 BTC. Now, the IMF has been urging El Salvador to forego the experiment that the organization dubs “dangerous.”
El Salvador undertook the BTC legal tender campaign as an effort to quash inflation which had reached unprecedented levels and had diminished the country’s purchasing power. The president, young tech visionary Nayib Bukele, has stood firm against what many have called “better judgment.”
The IMF has a well-documented history of criticizing El Salvador, and its president for that matter, for opting to accept BTC as payment. Even in 2021, though, the IMF had criticized Bukele’s ambition to see BTC passed as a currency. Previously, El Salvador adopted and used the US dollar between 2021 and 2021.
The IMF commented, saying: “Crypto-assets can pose significant risks and effective regulatory measures are very important when dealing with them.”
Despite the skepticism, El Salvador pushed through, obligating everyone in the country to get behind the move. Given the current price swing of Bitcoin, El Salvador may be sitting on as much as $12m in unrealized losses, according to a Bloomberg report.