IMF conducts on-site investigation in El Salvador: Maintains opposition to adopting Bitcoin as legal tender, advises against issuing Bitcoin bonds

The International Monetary Fund (IMF), after a recent visit to El Salvador, has issued a report on the country's economic development. Concerns about the risks of Bitcoin, which worry the IMF, are still emphasized as needing to be addressed.

Bitcoin Still Poses Financial Stability Risks

An IMF survey report indicates that the risks of Bitcoin in El Salvador still need to be addressed, as they maintain their opposition to Bitcoin as legal tender position.

The IMF states that based on surveys and remittance data, the use of Bitcoin in El Salvador is very limited, and the risks are not yet concrete. However, given Bitcoin's legal tender status, the country also encourages the use of crypto assets, such as the new legislative reforms for tokenized bonds, which could increase the use of Bitcoin.

Therefore, financial stability, fiscal sustainability, and consumer risks still exist. Hence, the previous recommendation to oppose Bitcoin as legal tender will be maintained.

In addition, the IMF believes that El Salvador should increase the financial transparency of Bitcoin transactions and the national Bitcoin wallet Chivo to assess possible financial contingencies and counterparty risks.

IMF Opposes Bitcoin Bonds

At the same time, the IMF also states that due to fiscal risks, it is "advisable to avoid" purchasing Bitcoin through the issuance of tokenized securities.

This is because of the legal risks, vulnerabilities, and speculative nature of the crypto market. The IMF suggests that El Salvador should reconsider its plans to expand exposure to Bitcoin, including issuing tokenized securities. Bitcoin fund management companies should implement regular spending controls and good practices.

The country's digital asset laws should also provide the same protections as traditional securities laws.

Read more about El Salvador news