The International Monetary Fund has said that El Salvador’s recent decision to make Bitcoin legal tender in the country could raise legal and financial issues.
During a press briefing Thursday from the International Monetary Fund, or IMF, spokesman Gerry Rice said the group was already in talks with Salvadoran lawmakers over a loan to support the country’s economy, after approving emergency funds related to the pandemic last year. However, Rice said an IMF team will meet with President Nayib Bukele today and implicit crypto will be a likely talking point.
“The adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” Rice said. “We are closely monitoring developments and will continue to consult with the authorities.”
IMF spokespersons have often voiced concerns about countries adopting digital currency. In March, the group issued a similar warning against the Marshall Islands recognizing its digital sovereign currency, called SOV, as legal tender because it may present similar legal and financial risks. In this case, a spokesperson said the islands’ local economy had been strained by the economic fallout from the pandemic and likely would not be corrected with the SOV.
Related: Marshall Islands digital currency ‘increases risk’, IMF says
In the case of El Salvador, the time between the introduction of ideas and the action is apparently short. President Bukele first announced that he would propose a bill making Bitcoin (BTC) legal tender in El Salvador during a pre-recorded video message at the Bitcoin 2021 conference this weekend. The bill passed by qualified majority yesterday in the country’s legislature.
Although the country is still seeking IMF support linked to the pandemic this year, it has already started to consider the energy needs of Bitcoin miners. Bukele said he would ask state-owned electricity company LaGeo to make certain facilities available to miners to use geothermal energy from the country’s volcanoes – El Salvador currently operates the two geothermal power plants in Ahuachapán and Berlin.
“Crypto assets can present significant risks,” Rice said. “Effective regulatory measures are very important to manage them. “