El Salvador will not benefit much from Bitcoin’s legal tender status. JPMorgan analysts wrote this in a note to clients on Friday. On Wednesday, El Salvador was the first nation-state in the world to secure the appropriate status for the cryptocurrency.
IMF disapproves of legalization of Bitcoin in El Salvador
Just a day after the Salvadoran government’s announcement, the International Monetary Fund did indeed raise concerns about the resolution. So, it called on local authorities to dialogue on the implications for financial stability and legal concerns. El Salvador is reportedly hoping to raise $ 1 billion from the IMF to cover its budget deficit. The $ 1 billion program already threatened by the resignation of the country’s attorney general and several senior judges. Bitcoin legalization casts doubt on the deal.
International Monetary Fund (IMF) spokesman Gerry Rice said that the IMF team will meet with President Nayib Bukele. And hinted that the main topic of conversation will be the President of El Salvador’s love for cryptocurrencies. El Salvador very quickly turned the approval of the law, which greatly surprised the representatives of the IMF. It took a small country a few days to do everything about everything. President Bukele first announced the Bitcoin bill at the Bitcoin 2021 conference this weekend. Legislative Assembly adopted the bill on June 9 by a majority vote.
“Cryptocurrencies can pose significant risks, Rice explained. – Effective regulations are essential when dealing with them”. In addition, cryptocurrency continues to be a vehicle for tax avoidance and government control.
JPMorgan notes that the more important issue is the implications of El Salvador’s legislation on large economies. Including their tax and banking laws, and financial regulation.
“These measures could be complicated if El Salvador’s move marks the start of a broad trend among smaller countries in a similar situation”, added banking analysts.
The IMF commented that El Salvador’s watershed Bitcoin bill, which passed by an overwhelming majority earlier this week, has caused legal and financial problems.
While this law marks an important moment in the Bitcoin revolution, it could also make it difficult for a tropical country to get a $ 1.3 billion loan from the IMF.
Crypto Twitter, in response to IMF threats, erupted in memes and words of support for Nayib Bukele. Thus, the crypto community believes that El Salvador should independently determine its monetary policy, and the IMF opposes only to protect its influence.
The head of the innovation department of the Bank for International Settlements, Benoît Cœuré, meanwhile, called the recognition of Bitcoin as a means of payment in El Salvador “an interesting experiment”.
“We don’t see that Bitcoin has been tested as a means of payment, as has been clearly stated earlier. Bitcoin is a speculative asset that requires appropriate regulation”, added Cœuré.