IMF Renews Call for El Salvador to Reform Bitcoin Policies and Regulatory Controls

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated: 

October 4, 2024

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The International Monetary Fund (IMF) has again urged El Salvador to scale back its Bitcoin policies and overhaul its cryptocurrency regulatory framework.

Julie Kozack, director at the IMF’s communications department, said during an Oct. 3 press conference that the agency’s staff are working closely with Salvadorian officials. They aim to finalize a new IMF-backed program to stabilize the economy, implement adjustments and support growth-promoting reforms.

IMF Calls for Bitcoin Risk Management

She further noted that tackling the risks associated with Bitcoin is central to these talks.

“With respect to the details on bitcoin 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 the public sector exposure to bitcoin,” she said.

Also, she noted that El Salvador’s 2025 budget proposal is a positive step toward strengthening public finances. At the same time, she stressed the importance behind strong implementation.

IMF Earlier Warned El Salvador About Bitcoin’s Volatility

The IMF has raised concerns about El Salvador’s Bitcoin policies before. Right after the country made Bitcoin legal tender in September 2021, the IMF advised reconsidering the decision, warning of financial instability due to Bitcoin’s volatility and a lack of consumer protections in crypto transactions. This advice also hinted that these innovations could complicate future IMF financial aid.

By Aug. 2024, while the worst risks hadn’t materialized, the IMF still urged El Salvador to improve transparency and strengthen risk management around Bitcoin activities.

“There is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project,” the agency said.