As the tiny Central American nation of El Salvador continues to move ahead with integrating Bitcoin into its economy, it faces pushback from a large international organization with its own clout around the world.
Helen Partz at Cointelegraph reports on criticism by the International Monetary Fund about El Salvador’s moves under president Bukele. Last year, El Salvador, under Bukele’s leadership, adopted Bitcoin as a legal tender cryptocurrency for the nation and created a digital wallet program called Chivo to try to get people invested in cryptocurrencies. This year, the country pioneered a crypto lending platform and undertook other initiatives to promote the use of Bitcoin in the national economy.
“The latest Bitcoin crash caused major dollar-nominated losses to El Salvador’s Bitcoin reserves,” Partz writes. “As previously reported by Cointelegraph, the Salvadoran government made its first 200-BTC purchase on Sept. 6, when BTC traded around $52,000. The government then bought 420 BTC on Oct. 27 when Bitcoin’s market price was above $58,000. El Salvador also later bought some Bitcoin at around $54,000 in November and more BTC at $49,000 in mid-December.”
After Bitcoin dropped quite a bit in past weeks, the IMF issued a memo suggesting that El Salvador should dissolve a $150 million trust fund related to Bitcoin on-ramps, and eliminate a $30 offer for citizens adopting the crypto wallet.
“What we emphasize in the report is that having a digital wallet, that allows people to make digital means of payment and keep their savings there, especially in US dollars, can bring benefits to the economy as well as to growth but again, I’m emphasizing US dollar because Bitcoin … price is volatile,” Alina Carare, head of the IMF’s mission in El Salvador, said in a recent call with reporters according to coverage by Claudia Torrens at Yahoo News. “We continue to have a strong engagement with the government of El Salvador.”
Reportedly, Carare did not confirm whether pending loans in negotiation for El Salvador by the IMF will be compromised by crypto issues.
Keep an eye on this small nation where crypto is not banned, but encouraged.