The International Monetary Fund has called on El Salvador to strip bitcoin of its legal tender status because of high risks to financial stability, consumer protection and financial obligations.
This was reported by Bloomberg.
“IMF executive directors representing the fund’s 190 member countries stressed bitcoin’s risks to “financial stability, financial integrity and consumer protection” and financial obligations.
They called on authorities to “narrow the scope of the bitcoin law by stripping bitcoin of its status as legal tender,” the agency quoted the IMF statement as saying.
Bloomberg recalls that El Salvador requested a $1.3 billion IMF loan in 2021, but negotiations were halted due to lender concerns about bitcoin.
The loan must be approved by the board of directors.
Individual executives have also expressed concern about the risks that a bitcoin-backed bond issue by El Salvador could pose.
The World Bank said it could not help El Salvador’s authorities with bitcoin implementation, given the environmental impact of cryptocurrency mining and transparency issues.
In September, El Salvador became the first country in the world to accept bitcoin as legal tender.