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The International Monetary Fund recently urged El Salvador to discontinue using Bitcoin (BTC) as legal tender citing potential risks. However, the country remains bullish on the crypto and even announced that it bought more BTCs when its price crashed last week.
El Salvador purchased 410 BTC when the crypto plunged below $37,000 last week, Business Insider. The acquisition was confirmed by President Nayib Bukele who highlighted the low purchase in a Twitter post.
“El Salvador just bought 410 #bitcoin for only 15 million dollars,” President Nayib Bukele tweeted on Friday. “Some guys are selling really cheap.”
Since the start of 2022, Bitcoin’s price has declined and even plunged below 30,300 on January 24, 2022, based on Coinmarketcap data. The crypto’s price has recovered has traded at around $38,058 at the time of writing. However, it is still way below the all-time high of around $69,000 set in November 2021.
After its purchase, El Salvador now holds more than 1,500 Bitcoins. President Bukele is known for buying the dip and bought BTCs when the crypto’s price dropped by around 7.7 percent on November 26, 2021.
However, the International Monetary Fund is still opposed to El Salvador’s adoption of Bitcoin as legal tender. In a report on Tuesday, the IMF executive board recommended that the country discontinue using BTC as legal tender due to financial risks and liabilities, according to Coindesk.
“Since September 2021, the government has adopted Bitcoin as legal tender,” the IMF wrote. “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.”
“They [IMF directors] stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities,” the report added. “They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.”
The recommendation came following bilateral discussions with El Salvador as the country has been in negotiations with the IMF for a $1.3 billion load. El Salvador adopted bitcoin as legal tender in September 2021, becoming the first country to do so.
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