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El Salvador pushes back IMF on its advice for them to drop Bitcoin as legal tender

The International Monetary Fund said on Friday that El Salvador should liquidate the USD 150 million trust fund it established when it made Bitcoin legal tender and return any unused assets to the country’s treasury.

The proposal was included in the international lender’s assessment of El Salvador’s economy, and it went beyond the international lender’s earlier this week statement pushing El Salvador to abandon Bitcoin as legal tender.

 

 

The statement of the Government

The IMF also advised that the USD 30 incentive for citizens to start using the digital wallet Chivo be removed, as well as increased regulation of the digital wallet to safeguard customers. It implied that there could be advantages to utilising Chivo, but only with dollars, not Bitcoin.

According to the analysis, the real expenses of adopting Chivo and enacting the Bitcoin law outweigh the potential advantages in the short term.

The office of Salvadoran President Nayib Bukele did not immediately reply to a request for comment, but in recent days, Bukele has been dismissive of the IMF’s Bitcoin recommendations.

The IMF raised worry about El Salvador’s rising vulnerability to the volatility of Bitcoin and demanded greater openness.

According to government authorities, the launch of Chivo has greatly improved financial inclusion, bringing millions of individuals who previously did not have bank accounts into the financial system. They also mentioned a parallel tourist marketing aimed towards Bitcoin fans.

According to the study, the government did not see the need to reduce the scope of the Bitcoin law, but acknowledged regulation might be improved.

Bukele spearheaded the campaign to make Bitcoin legal money alongside the US dollar. El Salvador’s Legislative Assembly became the first in the world to pass a Bitcoin law in June, and the law entered into force in September.

How do El Salvadorians feel about this? 

Karen Hernandez, who sells mobile phone accessories in El Salvador, claims that business has increased dramatically since the government adopted Bitcoin as legal money.

She hopes that President Nayib Bukele would defy the International Monetary Fund and continue to utilise cryptocurrencies.

“It was a fantastic experience that helped me grow as a person (our sales). It has propelled us to a new level of success “AFP spoke with the 45-year-old shopkeeper.

The government launched Chivo, a digital wallet that allows users to make and receive payments in both Bitcoin and US dollars, which the Central American country accepted in 2001 to help preserve monetary stability. Restaurants, hardware stores, pharmacies, and even street sellers accept bitcoin payments on the capital’s congested streets.

Elizabeth Arevalo, 25, works at an old building computer store and teaches clients how to use the Chivo wallet so they may use it at her business.

“We provide consumers a brief tutorial on how to use the wallet… They buy something from us when they learn how to utilise it. It’s a win-win situation for everyone “Arevalo stated.

 

 

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