The IMF`s request comes at a time when the value of cryptocurrencies is in free trade. Last week, Bitcoin lost more than 10% of its value as the declines continued. The cryptocurrency fell to $35,000, the lowest value since July. Bukele reacted with derision to those who criticize the depreciation of the virtual currency and his decision to adopt it. Most people come to buy when the price goes up, but the safest and most profitable time to buy is when the price goes down. It`s not rocket science. So invest some of your McDonald`s salary in Bitcoin, » Bukele wrote on Jan. 24. The president concluded his message with a « Drama Queens » for his critics. The IMF team recommends strengthening legal requirements for e-wallets, particularly Chivo, to fully protect users` funds in bitcoins and US dollars. Set legal limits on Bitcoin transactions and assets and promote the most transparent consumer protection framework with institutional involvement. « We all use bitcoins, » he said, although there is an awareness that with cryptocurrencies, your money « can go up just as it could go down. » With this level of support and with the absolute control he has over cases of power, it is unlikely that Bukele`s plans will be stopped, either in the case of bitcoins or for any other reform. Salvadoran ±o visited Turkey last week to get support, at a time when his relations with the United States – his country`s main partner – are going through off-peak hours.

Bukele met with Recep Tayyip Erdogan, with whom he signed six bilateral cooperation agreements in the fields of economy, trade, defense, diplomacy and education. But the topic that raised the most expectations during the visit was the use of cryptocurrencies in a country where its residents are in the midst of investment fever to protect their economies, while the Turkish lira suffered a sharp decline©in value. International financial regulators have also expressed some legal concerns. The World Bank and the International Monetary Fund, which are considering a financing agreement with El Salvador, have said the introduction of bitcoin could make the country vulnerable to money laundering operations and other illicit financial activities. The introduction of Bitcoin as legal tender will be fully funded by public money through©a trust fund. A drop in the price of Bitcoin threatens to deplete fiat resources and will force the government to fund them©by allocating additional resources or issuing debt, otherwise jeopardizing the convertibility between Bitcoin and the US dollar. El Salvador is the first country to accept Bitcoin as legal tender, despite its low public acceptance and international warnings about the risk it poses to consumers. President Nayib Bukele said the measure would give many Salvadorans access to banking services for the first time. Households and businesses that hold a balance in Bitcoin risk losing purchasing power if there are sharp price declines.

In a digital environment, they are also©exposed to cybercrime. The enthusiasm generated abroad by the Salvadoran government`s decision does not have the same acceptance among many people in the country, who perceive this decision as an echo of the financial colonialism that the global cryptocurrency movement is trying to undermine. Matthew Sigel, head of digital asset research at VanEck, the global wealth management firm, has doubts about how the government fund works, but believes cryptocurrencies can help El Salvador « free itself from the yoke of dollar colonialism » by implementing creative investment methods that bypass traditional channels and Bitcoin mining operations that exploit natural resources. El Salvador is implementing Bitcoin in an economy with little more than activity that is likely to slow down. Growth will be around 10% in 2021 and will slow the pace to 3.2% by 2022, with the risk of growth of only 2%. This will complicate the fiscal situation in El Salvador± which will have a public debt of 85% of GDP by the end of 2021. « It seems that El Salvador is just a tool to promote their cryptocurrencies, » said Tatiana Marroquín, a Salvadoran economist. « El Salvador is not just a means to an end, for us, El Salvador is the end. » The truth is that the IMF sets a number of conditions for countries seeking a loan. These include adjustments to economic policies that help « overcome the problems that led it to seek financial support from the international community » and serve to « ensure that the country will be able to repay resources ». But negotiations between El Salvador and the IMF appear to be at a standstill, especially as the country plans to issue Bonds in Bitcoin.

The International Monetary Fund (IMF) on Tuesday sent a strong message to Salvadoran President Nayib Bukele. The organization called on the popular president to eliminate Bitcoin as a legal currency in the Central American country, adding tensions in the relations between the fund and Bukele`s executive. For the president, the implementation of Bitcoin as a payment currency is one of his main projects, which he promotes with intensity both from his Twitter account « favorite platform to communicate his decisions » and in the tours he has undertaken to sell his country as a land of opportunities for entrepreneurs. Bukele did not immediately respond to the IMF`s request. However, President Nayib Bukele continued his plan. El Salvador started buying Bitcoin when it was trading around $50,000, but the price fluctuated wildly throughout all these months. With the recent purchase of 410 coins for $15 million last Friday, the country is adding more than 1,800. However, according to Bloomberg, Bitcoin has fallen nearly 50% since its November peak, so the Slavador is said to have lost about $20 million. President Nayib Bukele is promoting cryptocurrency as a path to financial freedom, but economists and many Salvadorans fear the move poses major risks. In September of last year, El Salvador became the first country in the world to adopt Bitcoin as its legal tender, but this measure was received unevenly.

While some of the cryptocurrency enthusiasts celebrated this milestone, another part of the citizens showed off the scam. Now, the International Monetary Fund (IMF) has stated that Bukele`s government should reverse part of its decision, citing the potential risks of cryptocurrencies to financial stability. As we saw above, the Board of Directors of the International Monetary Fund called in a statement on Tuesday to « reduce the scope of the Bitcoin Law by eliminating the status of legal tender » due to the great risks associated with its use in terms of « financial stability, financial integrity and consumer protection ». Nayib Bukel`s response on Twitter was a Simpsons meme in which the IMF shows Homer trying to get attention. Three months later, on September 7, El Salvador became the first country to adopt Bitcoin as its legal tender, a move that prompted the nation and many other states to discuss the opportunities and dangers of cryptocurrencies. To create incentives for use in a country where the majority of the population does not have access to the internet, the government is inviting Salvadorans to download a new digital wallet app that gives $30 in bitcoins to all citizens. The plan also highlighted the environmental impact of cryptocurrencies, as their production consumes more energy than many countries the World Bank has warned against. Several demonstrations were held to protest against the entry into force of the controversial law. Citizens protested against Bukele`s government and tried to submit correspondence calling for the repeal of the Bitcoin law, but faced barricades and the UMO to prevent their progress. El Salvador on Tuesday became the first country to introduce bitcoin as legal tender, allowing the cryptocurrency to be used in any transaction, from buying a cup of coffee to paying taxes.

The IMF`s Rice had already warned in early January that « crypto assets can pose significant risks » and therefore suggested that there should be « effective regulatory measures. » For Bukele, however, it is a « golden opportunity » for his country.