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IMF Urges El Salvador to Limit Bitcoin Use and Strengthen Regulatory Framework The International Monetary Fund (IMF) has called on El Salvador to scale back its Bitcoin policies, urging the country to narrow its Bitcoin Law, strengthen regulation, and reduce public sector exposure to the cryptocurrency, according to Cointelegraph. This comes after El Salvador became the first nation to adopt Bitcoin as legal tender in 2021, a move that has drawn global attention and sparked debate over the role of cryptocurrencies in national economies. The IMF continues to advocate for traditional financial systems and is promoting central bank digital currencies (CBDCs) through its REDI framework, which emphasizes Regulation, Enforcement, Data collection, and Information sharing as key components for managing digital currencies. IMF’s Recommendations for El Salvador’s Bitcoin Policies In its recent statement, the IMF outlined several recommendations for El Salvador to mitigate potential risks associated with its Bitcoin adoption: Narrow the Scope of the Bitcoin Law: The IMF has suggested that El Salvador should consider narrowing its Bitcoin Law, which currently mandates Bitcoin acceptance as a form of payment. A more limited scope could reduce risks associated with the volatility and unpredictability of Bitcoin, particularly for those who may not fully understand or wish to engage with the cryptocurrency. Strengthen Regulation: The IMF is urging El Salvador to bolster its regulatory framework for Bitcoin, ensuring that safeguards are in place to protect consumers and the financial system. This could include measures to prevent money laundering, fraud, and other illicit activities that could arise from Bitcoin’s decentralized nature. Reduce Public Sector Exposure: The IMF has recommended that El Salvador reduce its public sector exposure to Bitcoin, likely in response to the country’s significant investments in Bitcoin holdings. By reducing exposure, the IMF suggests that El Salvador could avoid the risks associated…

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Filed under: News - @ October 4, 2024 2:27 am