During a press conference on October 3, the International Monetary Fund (IMF) reiterated its calls for El Salvador to reverse its Bitcoin policy and review the regulatory framework for digital assets.
Julie Kozack, the director of the IMF’s communications department, did not provide specific details on the proposed regulatory changes but stated, “What we have recommended is narrowing the scope of the Bitcoin law, strengthening the regulatory framework and oversight of the Bitcoin ecosystem, and limiting the public sector’s exposure to Bitcoin.”
Since legalizing Bitcoin as legal tender in 2021, El Salvador has faced pressure from the IMF to move away from Bitcoin and adopt traditional financial infrastructure.
In August 2024, the IMF repeated its demands but acknowledged that many of the perceived risks of Bitcoin adoption have not yet materialized.
The IMF’s animosity towards Bitcoin and cryptocurrencies is well-known. As fiat currencies lose value globally, individuals and some nation states are turning to the sound monetary principles of Bitcoin.
The IMF has been offering technical advice to countries on monitoring Bitcoin transactions and has suggested imposing a capital gains tax on crypto to qualify for loans.
The IMF has also proposed taxing energy used for crypto mining to reduce carbon emissions, which could significantly impact miners already struggling with economic challenges.
While opposing Bitcoin, the IMF is promoting central bank digital currencies (CBDC) globally, with initiatives like the REDI framework aimed at making CBDC adoption more appealing.
Last September, the IMF released the REDI framework, which includes Regulation, Education, Design, and Incentives to assist central banks in making CBDC adoption more attractive to future populations.
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