The International Monetary Fund (IMF) said bitcoin should not be used as legal tender in El Salvador and urged the Central American country to strengthen the regulation and supervision of its newly established payment ecosystem.
In a statement published on Monday, the IMF recommended that El Salvador narrow the scope of its Bitcoin Law and mentioned “significant risks” that bitcoin has for consumer protection, financial integrity and financial stability.
The report corresponded with an official IMF visit to El Salvador conducted in accordance with Article 4 of its Constitutive Agreement, which annually overviews the fiscal, monetary and external situation of its members.
The IMF said the announcement of a $1 billion bitcoin-backed bond made by President Nayib Bukele on Saturday was not discussed in joint meetings between government officials and the agency.
Although the IMF’s technical analysis did not include the bond announcement, the financial institution said El Salvador’s plans to buy more bitcoin following the bond issuance, along with increasing its bitcoin exposure, “will require a very careful analysis of implications for, and potential risks to, financial stability.”
According to the IMF, El Salvador’s public debt could escalate beyond 95% of its GDP by 2026 if the country does not implement “strong policy measures” to correct fiscal imbalance and ease constraints on growth. The debt figure did not include the bitcoin bond recently announced, the IMF added.
Among the measures to limit contingent fiscal liabilities, the IMF recommended El Salvador consider winding down the $150 million trust fund created to facilitate the exchange between bitcoin and U.S. dollars. It also recommended withdrawing public subsidies to Chivo Wallet, a digital wallet launched by the Salvadoran government on Sept. 7.
Regarding the country’s new payments ecosystem, the IMF said El Salvador must immediately implement “stronger regulation and oversight.”
It added that the Chivo Wallet should be required to safeguard funds – in U.S. dollars and bitcoin – “by segregating and ring-fencing reserve assets.”
The banking regulation, for its part, should add prudential safeguards such as conservative capital and liquidity requirements related to bitcoin exposure, the IMF added.
El Salvador also must analyze the reporting of bitcoin-related transactions to determine how the cryptocurrency affects the Salvadoran economy and to closely monitor risks, the IMF said.
It's Facebook versus decentralized autonomous organizations in the virtual world of the future.
Crypto remains unfamiliar territory for a lot of folks. Make sure the ones you love are in on the action, and by the time you sit down for Thanksgiving dinner next year, they’ll be thanking you. The post How to Field Your Family’s Questions About Crypto This Thanksgiving appeared first on Worth.
The group plans next year to begin delineating how banks can legally get involved in the growing field.
2TM, the holding company for Mercado Bitcoin, Brazil’s largest crypto exchange by market valuation, is looking to become a leading provider of blockchain infrastructure services in Latin America.
Bitcoin (BTC) is starting to stabilize as altcoins such as ether (ETH) outperform. The rise in altcoins suggests a greater appetite for risk among traders as some indicators register short-term oversold readings.
Investors have focused on what Fed Chairman Jerome Powell's renomination means for interest rates, but coming personnel changes at the central bank will be just as important for the crypto industry, experts say.
Yahoo Finance Live's Akiko Fujita and Zack Guzman report on El Salvador's announcement to construct the first ever "Bitcoin City," where the cryptocurrency will be a widely accepted form of currency.
Rep. Alexandria Ocasio-Cortez, D-N.Y., said Democrats made a "mistake" by not asking her to campaign for Terry McAuliffe prior to his gubernatorial loss in Virginia this month.
I am late to the crypto space. That might be why I like Solana (CRYPTO: SOL) so much. I have no investments in Bitcoin (CRYPTO: BTC) or Ethereum (CRYPTO: ETH). Once you invest in something, you start to have a bias in its favor.
Ethereum failed to settle above $4,300 and pulled back towards the $4,200 level.
U.S. Border Patrol agents seized more than 60 pounds of meth at a checkpoint near Alamogordo, officials said.
The metaverse is a hot topic right now after Facebook's decision to rebrand as Meta. Facebook — along with many major companies like Microsoft and Disney — has been riding the virtual reality train for some time. Join us as we take a deep dive into virtual worlds.
Police say the shooting occurred in a marijuana deal
El Salvador plans to build the world's first so-called "Bitcoin City."This is the moment when the country's President Nayib Bukele announced the news. Date: November 20, 2021The circular city will be built at the base of the Conchagua volcano in the country's easter region of La Union, where the geothermal energy will power bitcoin mining. (President Nayib Bukele) "It is going to include everything: residential areas, commercial areas, services, museums, entertainment, bars, restaurants…everything devoted to bitcoin." Bukele says the "Bitcoin city" will be built with money from a $1 billion bitcoin-backed bond. Here's what we know about the proposed bond.Bukele said El Salvador plans to issue the bond in 2022. Half of the $1 billion sum would be converted to bitcoin;the other half will be used for infrastructure and bitcoin mining. Samson Mow is the chief strategy officer of blockchain technology Blockstream. He was on stage with Bukele during the announcement and said the bonds will be U.S. dollar-denominated 10-year bonds.They will also carry a coupon of 6.5%.That is well below the 13.5% interest rate yield El Salvador's 10-year bonds are currently trading at.More bitcoin-back bonds are also planned.Mow said he expected other countries to do the same.He also speculated that the moves would absorb enough bitcoin to push up the value of cryptocurrency. That would allow El Salvador to then pay off the bond with profits made from selling the bitcoin again.Crypto exchange Bitfinex was listed as the book runner for the bond. The bonds will be sold in $100 tranches to – quote- "democratize access" to them.They will be able to be traded 24/7 with other assets like stablecoins – another type of digital tokens. That's according to a blogpost from Blockstream.There are a few things that we still don't know about the bitcoin-backed bond.First, it is not known when exactly El Salvador would buy the $500 million worth of bitcoin it sees as crucial to the plan. Second, the legal rights of would-be buyers have also not yet been detailed. Most government bonds are strict legal contracts. That means the government is accountable if the debt is not repaid in full and on time. It is also not known what would happen to the new bonds if the country defaulted on its existing traditional bonds. The government's next bond deadline is an $800 million repayment due in January 2023. That bond is currently trading at a near 20% discount from its face value due to El Salvador's debt problems.The International Monetary Fund, whose help El Salvador is expected to need to ease its problems, has not commented on the "Bitcoin City" bond plan. Earlier in 2021, the IMF said it had both economic and legal concerns about El Salvador making bitcoin legal tender.
Bears remain in control after last week’s pullback, with sub-4,000 levels eyed. Key for the bulls would be a break through the day’s pivot and a return to $4,350.
To understand how rapidly New York completely overhauled its marijuana laws, look no further than its impact on the criminal justice system.
El Salvador is progressive on cryptocurrencies and believes they will drive economic growth.
A few tiny details in an Instagram post all but confirm that a 268-hp, all-wheel-drive GR Corolla is on the way.
Today, metaverse-related cryptocurrency The Sandbox (CRYPTO: SAND) has taken off, up nearly 14% as of 2:30 p.m. ET. The Sandbox has continued to accelerate higher throughout the day. This is a cryptocurrency with tremendous momentum, not only in recent trading days but over the past few weeks.
Dodge is phasing out its gas-powered Charger and Challenger muscle cars by 2024 in favor of electric muscle cars.
Bitcoin Should Not Be Legal Tender in El Salvador: IMF – Yahoo Finance
