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In a press conference on October 3, the International Monetary Fund (IMF) reiterated its calls for El Salvador to revise its Bitcoin policies, advocating for a reduction in the country’s exposure to the digital asset.
Julie Kozack, director of the IMF’s communications department, emphasized the need for El Salvador to “narrow the scope of the Bitcoin Law” and enhance the regulatory oversight of its Bitcoin ecosystem. While specific details were not disclosed, the IMF’s position remains clear: limit public sector involvement in Bitcoin and tighten regulatory frameworks.
El Salvador became the first country to legalize Bitcoin as legal tender in 2021, a move that sparked global interest but also criticism from institutions like the IMF. Despite ongoing pressure, the Central American nation has continued to embrace Bitcoin, leading to frequent warnings from the agency.
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Notably, in August 2024, the IMF acknowledged that many of the feared risks of Bitcoin adoption “have not yet materialized,” but it remains firm in its recommendations for El Salvador.
Ongoing Hostility Toward Bitcoin
The IMF’s opposition to Bitcoin is well-known, as the institution continues to favor traditional financial systems over decentralized digital currencies. As global fiat currencies face inflationary pressures, Bitcoin’s appeal grows, both among individuals and, in rare cases, nation-states like El Salvador.
Despite this shift, the IMF continues to view Bitcoin adoption with skepticism, often pointing to potential financial instability and energy consumption concerns.
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In recent years, the IMF has taken steps to regulate the crypto space in various countries. For example, it advised Andorra on Bitcoin transaction monitoring in 2023 and urged Pakistan to implement a capital gains tax on crypto to qualify for a $3 billion loan in 2024.
The organization also proposed a tax on energy usage for crypto mining, suggesting an 85% increase in energy costs for miners—a proposal that could seriously impact the already volatile industry.
IMF Advocates for CBDCs
While the agency remains resistant to Bitcoin, it is pushing for the adoption of central bank digital currencies (CBDCs) worldwide. In September, the IMF introduced its “REDI” framework, which outlines steps for central banks to adopt CBDCs, focusing on regulation, education, design, and incentives.
This dual stance illustrates the IMF’s preference for state-controlled digital currencies over decentralized alternatives like Bitcoin.
