IMF urges El Salvador's President to drop Bitcoin as legal tender in US$1.3 billion loan negotiations
That unlikely hero of cryptocurrency aficionados - El Salvador's President Nayib Bukele - may be in hot water regarding his decision to make Bitcoin a legal tender in his country. The scolding comes from none other than the International Monetary Fund (IMF) institution in Washington, DC, whose purpose is to distribute loans among countries in need, usually from the developing world, with reform conditions attached. The IMF Executive Board has finished its 2021 Article IV Consultation spree with El Salvador regarding a US$1.3 billion loan vehicle for the country, and has asked that El Salvador's President reconsider his decision to use Bitcoin as an official currency:
Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment—such as the Chivo e-wallet—could play this role. However, they emphasized the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin. They stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities. They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.
When it rains, it pours for bad Bitcoin news, and it seems that the so-called "crypto winter" meaning a long slog of depressed digital asset prices may already be upon us. El Salvador's unprecedented usage of Bitcoin as legal tender my be just the next domino to fall if its President gives way to the IMF's demands in order to obtain the US$1.3 billion loan. So far, he's given no indication that he'll follow the IMF's advice and even jokingly retweeted a current popular Bitcoin price crash meme that you can see below.