El Salvador has been advised by the global monetary watchdog to exercise caution in expanding government exposure to Bitcoin (BTC) due to the “speculative nature” of crypto markets.
A Feb. 10 statement from the International Monetary Fund (IMF) emphasized that Bitcoin’s risks to El Salvador have “not materialized” yet due to the country’s “limited” use of Bitcoin, after IMF staff visited the country last week.
The IMF stated that El Salvador should address Bitcoin’s risk to the country’s fiscal sustainability and consumer protection, as well as its financial integrity and stability.
It highlighted the importance of acknowledging these risks, as Bitcoin’s use in El Salvador “could grow” given it has been recognised as legal tender in the country since Sept. 2021.
El Salvador was urged to rethink its decision to issue tokenized bonds, as the IMF stated it should be “eschewed” due to its legal and financial risks. The statement noted:
“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their…