IMF urges El Salvador to limit Bitcoin exposure amid reforms

The International Monetary Fund (IMF) has called on El Salvador to tighten its Bitcoin (CRYPTO:BTC) law, strengthen regulation, and limit public sector exposure to the cryptocurrency.  

The IMF highlighted that managing the risks associated with the country's Bitcoin adoption remains a critical aspect of ongoing economic reform discussions.  

During a press conference, IMF spokesperson Julie Kozack stated, "What we have recommended is a narrowing of the scope of the Bitcoin law, strengthening the regulatory framework and oversight of the Bitcoin ecosystem, and limiting public sector exposure to Bitcoin."  

She also mentioned that El Salvador's proposed 2025 budget is a positive step toward improving public finances, but stressed that its success hinges on strong implementation.  

The IMF continues to engage with El Salvador as part of its broader efforts to solidify economic reforms while ensuring that Bitcoin does not undermine financial stability.  

Since its adoption of Bitcoin as legal tender alongside the U.S. dollar in September 2021, El Salvador has introduced key initiatives, such as the Chivo Wallet app and the proposed Bitcoin City—a tax-free hub powered by geothermal energy.  

In December 2023, the country's Bitcoin "Volcano Bonds" were also approved.  

Despite the IMF's repeated warnings, El Salvador has continued to increase its Bitcoin holdings.  

President Nayib Bukele, a vocal supporter of Bitcoin, has been purchasing 1 BTC per day since late 2022.  

As of 2024, El Salvador holds approximately 5,865 BTC, valued at over $356 million.  

The IMF's ongoing discussions with El Salvador aim to address the risks linked to the country’s use of Bitcoin while ensuring that necessary reforms are implemented.  

At press time, the Bitcoin price was $63,630.29.