Experts from the International Monetary Fund (IMF) observed the early risk related to El Salvador’s Bitcoin adoption. A statement issued by the IMF on February 10 revealed that for El Salvador to attain the bid for Bitcoin adoption, regulators should prioritize developing more crypto clarity and transparency.
Recently, El Salvador has motivated other countries to gear toward crypto adoption.
Despite the effort, the IMF regulators disclosed that risk-related Bitcoin adoption in El Salvador might fail to actualize now, but later, the country will experience some setbacks.
IMF Speculation
According to the February 10 report, IMF experts in the crypto industry challenged the Salvadoran regulators to review the objective of government involvement in Bitcoin adoption. The report identifies that El Salvador’s crypto bid exposes the country to legal and fiscal risks due to the uncertainty in the crypto market.
In January, the crypto-friendly country settled a $600M foreign bond amid the bumpy crypto winter. Before the bond repayment, Bitcoin enthusiasts in the region had questioned the country’s financial health.
IMF’s business trip to Central America is in line with the organization’s “article IV” requirement. Before this, such visits were crucial since they enabled the IMF to finance viable opportunities.
In 2021, El Salvador adopted Bitcoin as a legal tender discouraging the IMF from financing the country’s projects. The move made El Salvador a pioneer to integrate Bitcoin within the country’s legal tender at a time when other countries’ regulators have expressed pessimism in Bitcoin viability owing to its volatile exchange levels.
Also read:During the IMF visitation, the regulators noted that intended Bitcoin use in the country failed to yield desired results. However, the El Salvador crypto environment positions Bitcoin at a pivotal point to blossom quickly.
Also, the country’s legal tender and friendly regulations, including the newly launched tokenized bond, expedite Bitcoin adoption.
El Salvador Crypto Adoption
The unwavering commitment to making the El Salvador crypto hub has encouraged Salvadoran congress members to ease the issuance of digital assets by private and public institutions.
President Nayib Bukele has been a key player in realizing El Salvador’s Bitcoin vision. Bukele acquired more than 2380 Bitcoins last November to motivate the treasury to purchase Bitcoin daily.
The pro-crypto stance adopted by President Bukele is expediting the formulation of support infrastructure to increase adoption of Bitcoin among the unbanked population.
Meanwhile, it is unclear whether the treasury made Bukele’s proposed purchase. But if the treasury made the acquisition, El Salvador would own more than 2470 digital assets costing $106.4M. Such an investment would be valued at $52.2M and a 50% paper loss. The El Salvador policies have a lot of undisclosed details regarding government crypto investments.
The IMF regulators have encouraged the country’s authority to be more transparent when conducting government Bitcoin trade. The regulators inspired El Salvador to unveil the details of the financial condition of the country’s Bitcoin wallet Chivo.
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