El Salvador should scale back its campaign for Bitcoin: IMF

The advice came as part of the international lender’s study on El Salvador’s GDP.

El Salvador should liquidate the $150 million trust fund it established when it declared the cryptocurrency Bitcoin valid currency and give back any remaining amount to the treasury, according to the International Monetary Fund.

The advice came as part of the international lender’s study on El Salvador’s GDP released on Friday, and it goes against its prior comments encouraging the country to abandon Bitcoin as legal cash. The trust fund was set up to enable the automated conversion of Bitcoin to US dollars, El Salvador’s primary currency, in order to persuade individuals who were hesitant to use the extremely volatile digital currency.

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The IMF also suggested that the $30 reward for users to start using Chivo’s digital wallet should be removed and that the digital wallet should be regulated more strictly to safeguard users. It argued that adopting Chivo may have advantages, but only if dollars are used rather than Bitcoin.

“In the near-term, the actual costs of implementing Chivo and operationalizing the Bitcoin law exceed potential benefits,” according to the report.

The office of El Salvador’s President Nayib Bukele didn’t initially reply to a request for clarification, but Bukele seems to be unsupportive of the IMF’s Bitcoin suggestions in the past few days.
El Salvador’s increased exposure to Bitcoin’s instability has alarmed the International Monetary Fund, which has called for more clarity.