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Due to the risks, it creates for the country’s economy, the International Monetary Fund (IMF) has advised El Salvador to refrain from trading Bitcoin bonds. This most recent development follows tighter rules from the nation in Central America that encourage the usage of digital assets.
After recently traveling to El Salvador and speaking with financial officials there, the IMF released the statement. The IMF claims in the article that the dangers associated with using Bitcoin as legal money have not yet been shown. Following the enactment of new rules intended to encourage the usage of digital assets and Bitcoin bonds, there may be heightened dangers.
Earlier in January, the El Salvadorian Legislative Assembly enacted a new statute that governs the issue of digital assets other than bitcoins. The latest in a line of rules for digital assets is the bill President Nayib Bukele introduced via the Ministry of Economy. It offers El Salvador a legal framework for the use of digital assets, including the issuance of tokens and their initial public offerings.
The National Digital Assets Commission, a new regulatory agency that would implement securities legislation and safeguard the rights of buyers and issuers of these assets, is also established under the bill. The Act also established guidelines for the government’s planned issuance of bitcoin bonds or volcano bonds. El Salvador plans to issue $1 billion in Bitcoin bonds to buy Bitcoin and to put money toward building the fabled Bitcoin City.
The IMF, however, thinks that there should be more openness about the government’s acquisition of bitcoin. It should be mentioned that El Salvador’s government has faced criticism for its lack of openness over the use of tax dollars to purchase Bitcoin.
The official bitcoin wallet in El Salvador, Chivo, has received some criticism from the IMF. The international group claims that it’s critical to evaluate the fiscal and counterparty risks the wallet creates.
This comment came after a number of concerns regarding the wallet, including issues with blocked transfers, unsuccessful transactions, and deleted accounts. Additionally, instances of identity theft were documented, and even the El Salvadorian government was charged with financial loss. This is due to claims that more than $12 million was fraudulently obtained through the Chivo Wallet.
The wallet has been downloaded more than 4 million times since it was released, yet the El Salvadorian government insists on it still. Critics claim that the Central American nation’s adoption of a Bitcoin policy has been a disaster with several issues.
Since the year’s beginning in 2023, the price of bitcoin has increased by 30%. At the time of writing, the price of Bitcoin is about $21,800, a 7% weekly decline.
