El Salvador has been advised by international financial watchdogs to be cautious about increasing government exposure to Bitcoin (BTC) due to the “speculative nature” of the cryptocurrency market.
A February 10 statement The International Monetary Fund (IMF) has stressed that Bitcoin’s risks to El Salvador have yet to “realize” as the country’s use of bitcoin is “restricted” after an IMF staff visit to El Salvador last week. .
El Salvador has been recognized as legal tender in the country since September 2021, noting that the use of bitcoin “could grow”, citing the country’s financial integrity and stability and fiscal sustainability. Potential, proposed to address Bitcoin risks to consumer protection.
El Salvador has been asked to reconsider its decision to issue tokenized bonds, which the IMF said should be “avoided” due to legal and financial risks. said to
“Given the legal risks, fiscal fragility and largely speculative nature of the cryptocurrency market, the authorities have announced plans to expand the government’s exposure to Bitcoin, including the issuance of tokenized bonds. We need to reconsider.”
The IMF also stressed the importance of the government of El Salvador to “increase transparency” regarding both bitcoin transactions and the “financial situation” of the state-owned bitcoin wallet, Chibo Wallet.
Related: Bitcoin Decision in El Salvador: Tracking Adoption After One Year
This comes after recent news that a legal framework for Bitcoin-backed bonds in El Salvador, known as “volcano bonds,” was established on January 11th.
The government of El Salvador said these bonds will be used to pay off sovereign debt and finance the construction of the proposed “Bitcoin City.”
Bitcoin City is part of El Salvador’s plan to continue to attract crypto investors, and it has been previously noted that the country’s priority for 2023 is to combat possible crypto-related criminal activity. I got
Ditbanks CEO Guillermo Contreras told Cointelegraph on Jan. 6 that the opening of the National Bitcoin Office in El Salvador is a “central authority” to address these issues. said to function as