• The International Monetary Fund (IMF) has expressed its concern about El Salvador’s adoption of bitcoin as legal tender.
• The IMF is worried that El Salvador’s reliance on BTC could lead to fiscal fragility and legal risks.
• The IMF will continue to monitor the country’s use of bitcoin and potential tokenized bond products based on the digital asset.
El Salvador Adopts Bitcoin as Legal Tender
El Salvador recently made headlines when it declared bitcoin legal tender in September 2021. This makes El Salvador the first nation in the world to officially recognize and accept bitcoin as a payment option alongside fiat currency, such as USD.
The IMF Is Concerned About Risks Involved With Bitcoin Use
The International Monetary Fund (IMF) has voiced concerns about El Salvador’s embrace of bitcoin, citing potential risks such as fiscal fragility and legal issues. The World Bank even refused to aid El Salvador in their agenda due to the speculative nature of crypto markets. Despite this, the IMF admits that no issue has arisen yet but still warrants attention and transparency.
Price Volatility Could Have an Impact
Shortly after El Salvador declared BTC legal tender, it hit an all-time high of around $68,000 per unit. However, at the time of writing, the asset prices have dropped significantly to around $21,000 per unit which could have implications for how El Salvador uses cryptocurrency in future transactions.
Tokenized Bond Products Could Come Into Play
Given how strict cryptocurrency laws are becoming in El Salvador, there is a possibility that tokenized bonds based on BTC could soon be developed for use within the Central American nation.
The IMF Will Keep Monitoring Bitcoin Use In El Salvador
Even though no major issues have arisen from El Salvados adoption of BTC yet, the IMF plans to stay vigilant with monitoring any changes or developments with regards to its usage within this region.