IMF Urges El Salvador to Tighten Bitcoin Regulation

The International Monetary Fund (IMF) has once again advised El Salvador to refine its approach to Bitcoin. On Thursday, the IMF recommended narrowing the scope of the Bitcoin law and enhancing the regulatory framework surrounding the cryptocurrency ecosystem. The IMF also suggested limiting the public sector’s exposure to Bitcoin, according to Reuters.

Continued Dialogue on Bitcoin Risks

This isn’t the first time the IMF has raised concerns about El Salvador’s Bitcoin policies. In August, the organization highlighted the importance of boosting transparency and mitigating financial risks tied to the nation’s Bitcoin adoption. While “many of the risks have not yet materialized,” the IMF emphasized the need for further efforts to ensure fiscal and financial stability, as previously stated. This ongoing dialogue between El Salvador and the IMF dates back to November 2021, when the IMF urged the country to avoid using Bitcoin as legal tender.

In January 2022, the IMF reiterated the need for tighter oversight and supervision of Bitcoin in the country. Despite these recommendations, El Salvador became the first nation to adopt Bitcoin as legal tender in September 2021. At present, the country holds approximately 5,892 BTC, valued at about $345 million.

Mixed Results in Bitcoin Adoption

President Nayib Bukele has been a strong proponent of Bitcoin, aiming to make El Salvador a hub for cryptocurrency innovation. He has described the overall impact as “net positive,” though he acknowledged that the adoption rate has fallen short of his expectations. In contrast, the IMF has praised Bukele’s fiscal strategy, particularly his ambitious 2025 budget, which aims to free the country from debt.