Less than a week since El Salvador’s “Ley Bitcoin” has been approved by its national congress and the international financial organism is reacting. The International Monetary Fund (IMF) has expressed “economic and legal” concerns over the nation’s new pro-BTC legislation.
The country’s Head of State, Nayib Bukele, will meet with the financial organism today. The government of that country apparently seeks to settle a $1 billion credit program. However, their Bitcoin Law could become a hurdle. Per a Reuters report, an IMF spokesman, Gerry Rice said:
Adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis. We are following developments closely, and we’ll continue our consultations with the authorities.
Rice added that crypto-assets can be a risk at a regulatory level. The IMF will discuss their article IV with El Salvador’s national government. According to this article, the financial institution can hold bilateral discussions with its members.
During these annual meetings, the government provides the IMF with economic and financial data. In addition, the government officials and the institution discuss economic developments and financial policies, such as the Bitcoin Law. Rice said that “policies to strengthen economic governance” will be on the meeting’s agenda.
Bitcoin To Aid El Salvador With Economic And Social Growth
As El Salvador’s president has said, their new law has the objective of attracting capital into the country and turn it into a financial and innovation hub. There are many sectors, from miners to exchanges, already showing interest in moving their operations to the Latin American country.
Around 70% of the country’s population operates outside the traditional financial system, according to government data; Bitcoin has been used by everyday citizens to pay for basic goods, send remittances without a third party, and as a savings account. Thus, the Law seems to be targeted at helping them.
Dave Chapman, a founder at the BC Technology Group, compared El Salvador’s case with Facebook, Mark Zuckerberg, and the Libra Project. This company planned to launch its own digital asset pegged to a basket of currencies and received backlash from international organisms. The project was eventually shut down. Chapman said:
The manner in which the IMF is reaching out to Nayib Bukele reminds me of the knee-jerk reaction central banks and regulators attacked Mark Zuckerberg when he suggested he was going to completely dislocate the traditional payments and remittances businesses. It’s inevitable.
At the time of writing, BTC trades at $36,668 with a persistent downtrend across the board. In the short term, the $40,000 seems like the most important resistance that needs to be flint into support. Otherwise, the bull could find themselves vulnerable to another bear strike.
