The International Monetary Fund (IMF) acknowledged that the potential risks associated with El Salvador’s adoption of Bitcoin as legal tender have not materialized.
On August 6, the IMF’s financial regulator team, led by Raphael Espinoza, reported progress in discussions with El Salvador to provide financial support. This development comes after over two years of stalled talks on the nation’s Bitcoin policies.
The discussions focused on strengthening public finances, increasing bank reserves, and improving governance. Efforts were also made to enhance transparency to minimize risks linked to Bitcoin investments.
The IMF noted that while anticipated risks have not yet emerged, there is a mutual agreement on the importance of boosting transparency and addressing potential financial stability concerns related to Bitcoin.
The regulator stated:
“Progress has been made in negotiations towards a Fund-supported program, focusing on policies to strengthen public finances, boost bank reserve buffers, improve governance and transparency, and mitigate risks from Bitcoin.”
The IMF’s statement follows criticism of El Salvador’s decision in 2021 to recognize Bitcoin as legal tender. Since then, El Salvador has launched various initiatives, including a Bitcoin-linked freedom visa, Bitcoin reserves, mining projects, and plans for a tax-free Bitcoin City.
Max Keiser, a Senior adviser to El Salvador President Nayib Bukele on Bitcoin, highlighted the significance of the IMF’s acknowledgment, stating that the regulatory body has reversed its previous stance on the risks associated with El Salvador’s Bitcoin adoption.
He added:
“Bitcoin ‘de-risked’ El Salvador. We see it in their surging sovereign bonds. The new Bitcoin Bank Law will attract $100 billion in new private capital.”
Meanwhile, El Salvador has been increasing its Bitcoin holdings through strategic daily acquisitions in the past year. The country currently holds over 5,800 BTC, valued at around $332 million, as per official data.
