IMF Signals Change in Bitcoin Stance with El Salvador Update

The International Monetary Fund published a new statement about El Salvador regarding the negotiations between the multilateral organization and the Central American country.

The mission, led by Raphael Espinoza, said, “progress has been made in the negotiations toward a Fund-supported program,” and even the Bitcoin
Bitcoin
project in El Salvador received what could be considered positive feedback —specially taking in ming how reluctant the IMF have been regarding this decision.

“On Bitcoin, while many of the risks have not yet materialized, there is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project. Additional discussions in this and other key areas remain necessary”, the IMF said on a stament published August 6. We reached the IMF through its communication channels, and they declined to add any comment, pointing out that there’s “nothing further to add beyond this at this stage.”

It’s important to note that the IMF explicitly told El Salvador to decline its Bitcoin strategy in 2021, mainly focusing on the risks associated with adopting this technology. So this isn’t a radical change in the Bitcoin IMF’s stance, but at least there’s a tone change. Instead exclusively pointing to the risks associated with bitcoin, the fund recognized that those alerted risks have yet to exist . The fund will continue discussions with El Salvador’s administration to evaluate a possible financing plan further.

Salvadorean institutions like the Bitcoin Office have noted this shift. “We welcome this acknowledgment, and we believe that these risks will, in fact, never materialize in El Salvador,” the head of the office, Stacy Herbert, told me in an interview.

Herbert emphasized that this is due to the robust regulatory environment and the unprecedented level of transparency in the public bitcoin acquisition built by El Salvador. “We have established the world’s most robust regulatory regime related to bitcoin, and this has helped us maintain the highest standards for bitcoin companies operating within our jurisdiction. We, furthermore, have made public our bitcoin treasury address and this is an unprecedented level of transparency for any government,” Herber detailed.

Under Nayib Bukele’s administration, El Salvador declared bitcoin legal tender in 2021. Since then, the country has been dealing with the scrutiny of organizations like the IMF, but at the same time, they’ve been building laws, tax environments, and its accumulation strategy, buying at least one bitcoin daily.