- El Salvador’s 2021 Bitcoin Bill was hailed as a major boost for crypto adoption.
- The World Bank and IMF are known for their hostility towards Bitcoin.
- Recent talks between El Salvador and the IMF indicate the IMF’s growing acceptance of Bitcoin.
When El Salvador adopted Bitcoin as a legal tender in 2021, crypto enthusiasts hailed it as a major milestone for the currency’s global acceptance. However, not everyone shared this enthusiasm. Organizations like the World Bank and the International Monetary Fund (IMF) voiced strong opposition to the decision, with the IMF warning that Bitcoin’s legal tender status posed economic risks to the country.
As the three-year mark since the enactment of the Bitcoin Law approaches, the tide seems to be turning. The IMF has recently signaled a further shift in its stance, indicating a newfound willingness to collaborate with El Salvador to mitigate the potential risks associated with Bitcoin.
Has Bitcoin Won Over the IMF?
Despite its historically hostile stance towards Bitcoin, recent developments suggest the IMF is starting to embrace decentralized cryptocurrency.
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In a statement released earlier this week, the IMF announced progress in talks with El Salvador, focused on boosting economic growth and mitigating risks associated with Bitcoin.
Both parties reached common ground, agreeing on a 3.5% funding increase contingent on El Salvador reducing public spending, particularly its public wage bill. Although the IMF’s statement didn’t reveal specific details about the Bitcoin discussions, many earlier warnings had ‘not yet materialized.’
Nonetheless, the IMF remained cautious, emphasizing the need for increased transparency and additional measures to mitigate Bitcoin’s potential economic risks.
While this development falls well short of an IMF endorsement of Bitcoin, it does signal a noticeable ‘tone change’ from the institution, as noted by Forbes.
Bitcoiners Confused
The IMF’s changing stance toward Bitcoin was first noticed back in April after the organization published a study examining the use of the cryptocurrency in cross-border transactions. Surprisingly, the study found that Bitcoin acted as a ‘release valve’ for economic restrictions, ultimately improving economic inequality.
Given the IMF’s long-standing history of bashing Bitcoin, the study’s overall message was somewhat confusing to Bitcoiners. Economist Sean Doherty suspected that the study was some sort of play at regulatory capture rather than a genuine shift in the organization’s perspective.
Regardless of the IMF’s intentions with Bitcoin, the fact that the organization is now engaging in constructive dialogue with El Salvador demonstrates an understanding that the cryptocurrency is here to stay.
On the Flipside
- El Salvador has been buying one Bitcoin daily since November 2022.
- The country has amassed nearly 6,000 BTC to date, valued at around $338 million.
- The IMF warned that crypto adoption in emerging markets could destabilize economies by bypassing capital controls, diverting resources from the real economy, and increasing financial risks.
Why This Matters
The IMF’s apparent change of tone on Bitcoin underscores the growing influence and acceptance of cryptocurrencies in the global financial landscape.
Learn more about Google’s involvement in blockchain and its other ventures here:
Google Play Pushes for Blockchain Support. Will Apple Respond?
Find out the results of Chainalysis’ latest Global Crypto Adoption Index here:
Grassroots Crypto Adoption Takes Lead in Central & South Asia
