During an October 3 press conference, the International Monetary Fund (IMF) reiterated its call for El Salvador to scale back its Bitcoin policies and reform its regulatory framework surrounding digital assets. The IMF suggested narrowing the scope of the country’s Bitcoin Law and enhancing regulatory oversight, warning against continued public sector exposure to Bitcoin. However, specific details about the proposed regulatory changes were not disclosed.
Julie Kozack, the IMF’s director of communications, emphasized the need for regulatory tightening in El Salvador. The IMF has been vocal about its concerns over the country’s adoption of Bitcoin as legal tender since the policy was first introduced in 2021. The financial organization has repeatedly recommended El Salvador shift its focus back to traditional financial systems.
The IMF renewed its pressure during a press conference on October 3, 2024. This follows a similar appeal in August 2024, where the IMF acknowledged that the anticipated risks of Bitcoin adoption had not yet materialized, but still cautioned against its widespread use.
The calls for policy changes are directed at El Salvador, the first country in the world to legalize Bitcoin as legal tender in 2021. The IMF’s concerns reflect the potential global implications of a country fully embracing a cryptocurrency as part of its financial system.
The IMF argues that El Salvador’s heavy reliance on Bitcoin exposes the nation to significant financial stability risks. The organization has long maintained that Bitcoin’s volatility and lack of regulatory oversight pose threats to countries’ financial systems. The IMF is also pushing for greater global adoption of central bank digital currencies (CBDCs), which it sees as a more stable alternative to non-state-backed cryptocurrencies like Bitcoin.
The IMF’s recommendations include narrowing the Bitcoin Law’s scope and imposing stricter regulations on the Bitcoin ecosystem in El Salvador. Meanwhile, the IMF has been promoting its “REDI” framework for CBDC adoption, advocating for regulation, education, design, and incentives to support central banks considering their own digital currencies.
El Salvador has yet to respond to the renewed pressure, but previous discussions between the country’s leadership and the IMF have been met with resistance, as President Nayib Bukele remains steadfast in his support for Bitcoin.
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