Risks Of El Salvador’s Bitcoin Not Materialized But Caution Is Warranted, Says IMF
Key Points: The IMF declared after an annual inspection that El Salvador had not adopted bitcoins. However, caution is advised.
The Central American country was encouraged by the banking agency to reconsider its plans to promote cryptocurrency usage.
Although its BTC investments have not yet paid off, El Salvador’s economy is back to pre-pandemic levels.
The International Monetary Fund stated that El Salvador’s adoption of bitcoin was not at risk, mainly due to its limited use. However, it is advised to exercise caution.
The legal risks, fiscal fragility, and largely speculative nature crypto markets present, authorities should reconsider plans to increase government exposure to Bitcoin. This could include issuing tokenized bonds. Regular expenditure controls and good governance practices should be followed when the proceeds of the new Bitcoin Fund Management are used. The new Digital Asset Law should offer guarantees that are equivalent to traditional securities regulations.
The IMF stated that El Salvador made BTC official tender in September 2021. This was much to the annoyance of the IMF and its president, Nayib Bukele has been a strong advocate for BTC on Twitter. Despite his optimism, paper losses on the country’s bitcoin investments are currently at least 50%. This is despite El Salvador’s opaque ownership and purchases.
It is essential to have greater transparency about the government’s Bitcoin transactions and the financial position of Chivo, the state-owned Bitcoin wallet ( Chivo ), in order to evaluate the underlying fiscal contingencies as well as counterparty risks.
the IMF saidThough its bitcoin investments have yet to pay off, El Salvador’s economy has recovered to pre-pandemic levels, according to the IMF, thanks to a strong government response to the health catastrophe.DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.Join us to keep track of news: https://linktr.ee/coincuThanaCoincu NewsTags: # Bitcoin options# Bitcoin regulationsbitcoinbitcoin paymentBitcoinsRegulation #Bitcoin