Sun, 29 May 2022

El Salvador became the first country in the world to adopt Bitcoin as legal tender in 2021

The International Monetary Fund (IMF) encouraged El Salvador to drop Bitcoin's status as an official currency on Tuesday, warning that the cryptocurrency could cause financial instability.

In a statement, the IMF claimed El Salvador's decision to adopt Bitcoin as legal tender last year "entails large risks for financial and market integrity, financial stability, and consumer protection."

The IMF called for "strict regulation and oversight" of Bitcoin in the country and urged the government to "narrow the scope of the Bitcoin law by removing Bitcoin's legal tender status."

"Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds," the IMF added.

El Salvador - the first country in the world to adopt Bitcoin as legal tender - plans to issue a 10-year, $1 billion Bitcoin bond this year.

President Nayib Bukele appeared to brush off the IMF warning in a Twitter post on Tuesday, which mockingly portrayed the organization as The Simpsons' iconic buffoon character Homer Simpson walking on his hands. "I see you, IMF. That's very nice," the post was captioned.

On Sunday, after Bitcoin traded at its lowest level since July, causing an estimated $20 million loss to El Salvador, President Bukele jokingly changed his Twitter profile picture to an edited image of himself wearing a McDonald's uniform.

Bukele - who refers to himself as the 'CEO of El Salvador' on social media - has been a vocal supporter of Bitcoin. In November, Bukele announced plans for a 'Bitcoin City' funded by cryptocurrency bonds, while in October, he revealed that the country had mined its first bitcoin using power from a volcano.


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