The International Monetary Fund has urged El Salvador to reverse its recognition of bitcoin as legal tender.
The Latin American country allowed the use of the cryptocurrency for all transactions in September 2021, becoming the first country to do so. The government of El Salvador bought 1,801 BTC for about $50,000 per coin. The country lost about $20 million when bitcoin nosedived by 45% from its high of $68,000 in late 2021.
The IMF highlighted large risks associated with the use of bitcoin on financial stability. Furthermore, El Salvador’s decision remains a major obstacle for the nation’s efforts to get a loan from the institution. Last year, El Salvador sought a $1.3 billion loan from the IMF, but talks stalled due to the creditor’s bitcoin concerns. The IMF called upon the country’s government to narrow the scope of the bitcoin law by removing the cryptocurrency’s legal tender status.
