El Salvador’s congress approved a law in the week requiring businesses to simply accept Bitcoin in exchange for goods and services.
El Salvador’s adoption of Bitcoin as tender may imply a series of risks and regulatory challenges, International fund spokesman Gerry Rice said Thursday.
“Adoption of Bitcoin as tender raises variety of macroeconomic, financial and legal issues that need very careful analysis so we are following developments closely and can continue our consultation with authorities,” Rice said, speaking in Washington. “Crypto assets can pose significant risks and effective regulatory measures are vital when handling them.”
An IMF team is conducting virtual meetings with El Salvador on its Article IV review of the country and a possible credit program “including policies to strengthen economic governance” Rice said. The team will meet with Bukele Thursday.
El Salvador’s congress approved a law in the week requiring businesses to simply accept Bitcoin in exchange for goods and services. President Nayib Bukele said the digital currency will help counter El Salvador’s low banking penetration and cut the value of sending remittances.
The nation’s bonds dropped, sending the yield on its bonds coming due in 2025 up 71 basis points to 7.8% at 10:40 a.m. in ny . El Salvador’s bonds are the worst performers in emerging markets in the week , consistent with a Bloomberg Barclays index.
“The plans for Bitcoin under an increasingly autocratic regime will likely only compound concerns about corruption, concealment and therefore the independence of regulatory agencies,” Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont, wrote during a note.
