According to a statement published on Tuesday by the International Monetary Fund (IMF), El Salvador’s government has been urged to remove Bitcoin’s legal tender status.
El Salvador was the first nation to legalize cryptocurrency use in all transactions, along with the U.S. dollar, in September.
IMF to El Salvador: Drop bitcoin as legal tender
The government’s decision sparked large-scale protests because many people thought it would cause chaos and inflation in the country. Since November, Bitcoin’s value has dropped by about half.
The International Monetary Fund has issued a warning to President Nayib Bukele about the dangers of cryptocurrencies, pointing out that the IMF would be difficult to borrow from.
The statement reads:
“The adoption of a cryptocurrency as legal tender, however, entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”
El Salvador’s government released a new digital wallet software after the nation legalized bitcoin as a legal tender, providing $30 in Bitcoin to each resident. Over 200 additional cash machines were put in operation throughout the country.
Because the value of Bitcoin may vary significantly, it has generated a lot of debate among investors and regulators.
On Tuesday, Bitcoin was worth about $37,000, having declined about half of its value compared to the all-time high of $67,734 set in November.
In November, El Salvador’s president Nayib Bukele announced his plans to construct a “Bitcoin City” powered by geothermal energy from a volcano that will help raise bitcoin’s profile and encourage its usage.
