Adoption of bitcoin (BTC) as legal tender raises “a number of macroeconomic, financial and legal issues that require very careful analysis,” Reuters reported, citing a spokesman for the International Monetary Fund (IMF).
The fund is following “developments closely” and will continue “consultations with the authorities.”
As reported, Nayib Bukele, the President of El Salvador, will discuss the Bitcoin law with the IMF today, as the country is in talks with the Fund over a USD 1bn program.
At 15:01 UTC, BTC trades at USD 37,171 and is down by 2.5% in an hour, trimming its daily gains to almost 6%.
“The plans for Bitcoin under an increasingly autocratic regime will likely only compound concerns about corruption, money laundering and the independence of regulatory agencies,” Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont, wrote in a note, per Bloomberg.
Meanwhile, in 2018, the small and remote Pacific island country, the Republic of the Marshall Islands (RMI) was also warned by the IMF over their coin project.
“The potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT [Anti-Money Laundering and Countering Financing of Terrorism], and governance risks,” the Fund said back then.
The country ignored the warning and, in 2020, partnered with Algorand to build a blockchain for its first national digital currency, the Marshallese sovereign (SOV). However, there were no updates on the project this year.