By Brendan O’Boyle
(Reuters) – Risks over El Salvador’s embrace of bitcoin “have not materialized,” but use of the cryptocurrency still requires transparency and attention, the International Monetary Fund (IMF) said Friday in a statement after a visit to the Central American country.
“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement.
The annual visit by IMF staff followed a $600 million bond payment by El Salvador last month amid investor concerns over its financing sources and fiscal policy.
The IMF’s so-called “article IV” visit has been sharply critical in the past. El Salvador’s move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.
While the lender noted that risks “have not materialized due to the limited bitcoin use so far,” it said the cryptocurrency’s “use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including…