El Salvador Under Pressure From IMF To Remove Bitcoin As Legal Tender

El Salvador had come on the radar of the financial world after it announced that it was making bitcoin a legal tender. The decision made the small North American country a favorite among crypto enthusiasts but not everyone has been happy with this move. One of those has been the IMF.

In a recently released report, the IMF has put more pressure on the country to remove bitcoin as a legal tender. It cites the country’s debt profile as well as financial problems as a reason why they should do this. Even going as far as opposing the first bitcoin-backed bond that is scheduled to be launched in the country.

IMF Wants Bitcoin Gone

The IMF report on El Salvador features reports from the Executive Directors. These Directors commented on a number of issues in respect to El Salvador, from the COVID-19 pandemic to the financial stature of the country. El Salvador was lauded in the report for having one of the tightest grasps on the pandemic issues, greatly limiting the toll on both economic and Human Resources.

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However, the North American country did not get any love from the Directors regarding its decision to make Bitcoin a legal tender. For four months now, El Salvador has been using BTC as a legal tender, facilitated by the government-approved Chivo wallet. Directors warned that the use of bitcoin as legal tender has great implications on the country’s “financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.”

Due to this, the Directors have urged the country to strip bitcoin of its status as a legal tender, despite it leading to greater financial inclusion, as noted in the report. The Directors also point to risks that could arise from issuing bitcoin-backed bonds.

BTC recovers to $37K | Source: BTCUSD on TradingView.com

One of the effects of making BTC a legal tender in the country has been the IMF pointing out that the nation would find it hard to secure a loan from the IMF. This has however not deterred President Bukele, who has continued to push the bitcoin agenda in the country.

How Is El Salvador’s BTC Doing?

One way that the country of El Salvador had commemorated bitcoin becoming a legal tender was to purchase BTC. The country started out by purchasing 400 BTC before September 7th, known as Bitcoin Day. It has since gone to purchase more bitcoins, now holding more than 1,000 BTC.

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This was applauded as a good move by those in the space who noted that the country would be far ahead of its peers when bitcoin becomes the widely accepted store of value. However, with the bitcoin crash, El Salvador’s BTC investments have not fared too well.

As of Wednesday, bitcoin has lost almost 50% of its value from November. As El Salvador had continued to purchase bitcoin through this period, its holdings are expected to be at loss currently. According to Bicoinist, the country’s BTC investments are down by 23%.

Featured image from Anadolu Agency, chart from TradingView.com