There are a number of economic, financial and legal problems in recognizing Bitcoin as an official means of payment in El Salvador, said Gerry Rice, a spokesman for the International Monetary Fund (IMF). He added that the organization is monitoring this situation and is continuing its dialogue with the El Salvadorian authorities.
Rice said the IMF representatives will discuss his initiative with Bukele. The organization interested in ensuring that there are no problems with the legal use of Bitcoin. “Cryptocurrency assets can carry significant risks. Effective regulation is essential when dealing with them”, insists Rice.
IMF officials have often expressed concerns about countries’ transition to digital currencies. In March, the organization issued a similar warning that the Marshall Islands would recognize its digital currency, the SOV, as legal tender, as it could pose similar legal and financial risks.
In the case of El Salvador, the time period between the announcement of the idea and the subsequent action was very short. President Bukele first announced the Bitcoin bill at the Bitcoin 2021 conference this weekend. The bill was approved on June 9 by a majority vote. The vote on the bill received 62 votes out of 84.
Thus, El Salvador became the first country in the world to recognize Bitcoin as legal tender.
El Salvador’s President Nayib Bukele this week signed a law that equates cryptocurrency with the US dollar (the country’s main currency). According to the new rules, prices in the country can be set in Bitcoin. And tax payments can also be paid in digital assets.
Thus, the country’s authorities hope to attract cryptocurrency companies, as well as “improve the lives” of their citizens.
Bitcoin mining using volcanic energy
The President of El Salvador Nayib Bukele didn’t stop at the achieved results. The day before, on Twitter, he announced his intention to make a territory out of his country that would be attractive for miners.
The head of state instructed to start mining Bitcoin using the energy of volcanoes. So, it begins the creation of a full-scale mining hub using geothermal energy.
El Salvador against all
El Salvador’s President Nayib Bukele is to meet with representatives of the International Monetary Fund (IMF). The topic of the emergency meeting remains unknown. But the IMF decided to meet with the head of the republic after Bitcoin became legal tender in El Salvador.
Although the organization is also in talks with El Salvador for a loan to support the country’s economy in connection with the coronavirus pandemic. El Salvador is awaiting approval for $ 1 billion in funding from the IMF.
Perhaps the legalization of Bitcoin will call into question a loan from the IMF in the amount of more than $ 1 billion?
Relations may deteriorate as Bukele’s party fell out with Washington in May. Removing five Supreme Court justices and the chief prosecutor from office. Top manager of the American broker Amherst Pierpoint Securities Siobhan Morden believes that the legalization of Bitcoin “will further complicate and slow down technical discussions with the IMF”. When exactly Bukele’s meeting with the IMF will take place is officially unknown.
Note that news from El Salvador affected the price of Bitcoin.