This week, El Salvador passed legislation making Bitcoin legal tender, putting it on par with the country’s official currency, the US dollar.
While this was initially hailed as a triumph for Bitcoin, the International Monetary Fund (IMF) has since expressed reservations about the move. IMF spokesman Gerry Rice said at a press conference on the subject:
“The adoption of bitcoin as legal tender raises a slew of macroeconomic, financial, and legal issues that need to be thoroughly investigated.
We’re keeping a close eye on things and will continue to consult with the authorities.”
IMF Does Not Approve Of Sovereign Adoption of Bitcoin In El Salvador
El Salvador moved quickly from announcing its intention to adopt Bitcoin to holding congressional hearings and finally enacting legislation.
President Nayib Bukele discussed the economic benefits of Bitcoin, particularly in terms of assisting Salvadorans living abroad with remittances.
The IMF and foreign investors, on the other hand, are not pleased with this decision.
El Salvador is currently in talks with the International Monetary Fund (IMF) about a $1 billion funding program to close budget gaps until 2023. This comes on top of a $389 million COVID relief payment received last month.
Following the removal of the country’s attorney general and several top judges, the $1 billion program was already in jeopardy. The legalization of Bitcoin, on the other hand, casts even more doubt on the deal.
El Salvador’s Congress voted last month to remove the country’s top prosecutor, Attorney General Raul Melara, as well as five Supreme Court judges.
Melara is one of the few people holding President Bukele and his party accountable for corruption, according to US officials. President Bukele addressed the international community in a tweet that read:
“We want to collaborate with you, trade with you, travel with you, get to know each other, and assist you in any way we can. Our doors are wider than they’ve ever been. But, with all due respect, we’re cleaning our house… and it has nothing to do with you.”
The Crypto Community Responds
El Salvador should be free to decide its own monetary policy, according to social media comments, and the IMF is doing this to protect its power of influence, according to calls for revolution.
Max Keiser proposed that the Bitcoin community raise the money and loan it to El Salvador in response to the Central American country’s $1 billion budget shortfall.
“I’m sure #Bitcoiners can arrange a $1 billion lending facility stop-gap for El Salvador. The IMF can go f*** themselves.”
Keiser later tweeted about his “Bitcoin Mining Backed Volcano Bond” (BMBVB) idea. Precise details on this are scant at the moment. But presumably, as the name suggests, it would be backed by revenues generated from volcano-powered mining grids.
President Bukele said he spoke with the country’s geothermal electricity company yesterday to action volcano-powered Bitcoin mining.
