El Salvador this week passed a bill making bitcoin legal tender, equating it to the country’s official national currency, the US dollar.
Although it was celebrated as a victory for bitcoin, the International Monetary Fund (IMF) has expressed its concern with the move. During a press conference on the matter, IMF spokesman Gerry Rice said:
“The adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis.
We are following developments closely, and we will continue our discussions with the authorities.”
IMF Doesn’t Approve Sovereign Adoption of Bitcoin in El Salvador
El Salvador announced its intention to adopt bitcoin through congressional discussion and then passing the resolution into law.
President Nayib Bukele talked about the economic benefits of bitcoin, especially in helping to send foreign Salvadorans back home.
However, the IMF and foreign investors are not in favor of this move.
El Salvador is currently in talks with the IMF for a $1 billion funding program to bridge the budget gap by 2023. This is in addition to the $389 million loan received as COVID relief payments last month.
The $1 billion program was already under threat since the ouster of the country’s attorney general and several top judges. But the legalization of bitcoin has cast further doubts on the deal.
Last month, the El Salvadorian Congress voted to remove its top prosecutor, Attorney General Raul Melara, and five Supreme Court justices.
US officials expressed concern, as they consider Melara to be one of the few controlling corruption by President Bukele and his party. a tweet of President Bukele Addressing the international community read:
“We want to work with you, do business, travel, get to know each other, and help where we can. Our doors are open more than ever. But all the respect With: We’re cleaning our house… and it’s none of your business.”
The crypto community reacts
In the case of El Salvador’s $1 billion budget shortfall, Max Keizer Highlighting the idea of the bitcoin community raising money and lending it to the Central American country.
“I believe #bitcoiners A $1 billion loan facility could provide a stop-gap for El Salvador. The IMF can f*** itself go.”
Keizer Later tweeted about his “Bitcoin Mining Backed Volcano Bond” (BMBVB) idea. Exact details on this are currently scarce. But presumably, as the name suggests, it will be backed by revenue generated from the volcano-powered mining grid.
President Bukele said he spoke with the country’s geothermal power company yesterday to take action on volcano-fired bitcoin mining.
Source: BTCUSD on TradingView.com