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The IMF Is “Waking Up” To Bitcoin, Says Bitwise CIO

Andrew Throuvalas
Last updated: | 2 min read

The International Monetary Fund (IMF) is warming up to Bitcoin’s merits after years of criticizing and discouraging the use of crypto at large, according to crypto fund manager Bitwise.

In a Twitter thread published on Monday, Bitwise CIO Matt Hougan dug into a 43-page paper published by three IMF researchers on April 5, which examined academic literature to assess Bitcoin as a medium of cross-border value transfer.

IMF On Bitcoin Remittance Payments


The paper presented on-chain and off-chain measures of international Bitcoin flows and found that such flows respond differently to traditional drivers. Specifically, the magnitude of cross-border Bitcoin transfers appears high in several countries with respect to their GDP – especially ones that typically experience small capital flows.

“It makes sense,” Hougan wrote. “People in countries facing either capital controls or limited access to the global economy are using Bitcoin as a release valve.”

The executive highlighted that the United States’ relatively low adoption of Bitcoin as a tool for capital flows does not capture the reality of its use across the globe – and is, in fact, an extreme outlier compared to other countries.

For example, Chainalysis data shows that cross-border on-chain Bitcoin flows in Venezuela averaged 0.8% of GDP between 2019 and 2022, versus less than 0.1% of GDP in Canada or the USA.

On-Chain VS Off Chain Flows


In general, on-chain cross-border flows align with crypto-specific sentiment, including a negative correlation with broad dollar appreciation events, and a positive correlation with the VIX – a measure of implied stock market volatility.

In contrast, off-chain Bitcoin flows “seem correlated with incentives to avoid capital flow restrictions” – and are typically much smaller than on-chain transactions. Meanwhile, off-chain and on-chain flows both positively correlate with high inflation rates in a given country.

By Hougan’s assessment, the IMF’s paper is a sign that they are “paying attention” to Bitcoin in a way that they once neglected to.

“The IMF is doing this research because bitcoin “has grown rapidly over the past decade” and policymakers increasingly need to understand its impact on the global economy,” he wrote. “The world is waking up to bitcoin.”

Over the past several years, the IMF has criticized El Salvador’s adoption of Bitcoin as legal tender and urged the country to revoke its Bitcoin Law. In October, the IMF proposed a risk assessment matrix for countries to mitigate the negative macro-financial impact of crypto on their economies.