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The International Monetary Fund (IMF) has once again called on El Salvador to reduce its Bitcoin policies and reform its cryptocurrency regulatory framework.
Julie Kozack, director of the IMF’s communications department, stated during a press conference on Oct. 3 that the agency’s staff are collaborating closely with Salvadoran officials. Their goal is to finalize a new IMF-supported program aimed at stabilizing the economy, implementing necessary adjustments, and fostering growth-oriented reforms.
IMF Advocates for Bitcoin Risk Management
She further emphasized that addressing the risks linked to Bitcoin is a key focus of these discussions.
“Regarding the specifics of Bitcoin, our recommendations include narrowing the scope of the Bitcoin law, enhancing the regulatory framework and oversight of the Bitcoin ecosystem, and limiting public sector exposure to Bitcoin,” she stated.
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Additionally, she mentioned that El Salvador’s budget proposal for 2025 represents a constructive move toward bolstering public finances. Simultaneously, she highlighted the significance of effective implementation.
IMF Previously Cautioned El Salvador About Bitcoin’s Volatility
The IMF has previously expressed concerns regarding El Salvador’s Bitcoin policies. Immediately after the nation declared Bitcoin legal tender in September 2021, the IMF advised reconsidering this decision, cautioning against financial instability stemming from Bitcoin’s volatility and insufficient consumer protections in cryptocurrency transactions. This guidance also suggested that such innovations could complicate future financial assistance from the IMF.
As of August 2024, while the most severe risks had not yet emerged, the IMF continued to urge El Salvador to enhance transparency and bolster risk management concerning Bitcoin activities.
“There is a shared acknowledgment that additional efforts are necessary to improve transparency and mitigate potential fiscal and financial stability risks associated with the Bitcoin initiative,” the agency stated.
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