Following consultations, the Executive Board of the International Monetary Fund (IMF) recommended that El Salvador, which in September 2021 recognized bitcoin as its official currency, revoke this status from the digital means of payment. This is stated on IMF website on Tuesday, January 25th.
“The adoption of cryptocurrencies as legal tender entails great risks to financial and market integrity, financial stability and consumer protection. This may also give rise to contingent liabilities,” the IMF executive board noted.
At the same time, it was noted that the country needs to expand access to financial services and digital payment tools, such as the Chivo e-wallet, can contribute to this.
“But they (IMF Executive Board Members – Ed.) stressed the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin, as there are great risks associated with using Bitcoin for financial stability, system integrity and consumer protection, as well as associated with them financial contingent liabilities. They called on the authorities to narrow the scope of the bitcoin law by removing bitcoin’s legal tender status.
Some council members also expressed concern about the risks associated with issuing bonds backed by bitcoin.
In September 2021, El Salvador became the first country in the world to legally declare bitcoin as an official means of payment along with the US dollar. After that, the President of El Salvador, Nayib Bukele, updated the status on his Twitter account, and instead of “the dictator of El Salvador”, he called himself “the coolest dictator in the world.”
Russian President Vladimir Putin in July 2020 signed into law a law regulating digital financial assets (DFA) and cryptocurrencies. According to the document, since 2021, the country will be allowed to conduct transactions with CFA, cryptocurrencies can be the object of collateral, purchase and sale transactions, exchange of one type of CFA for another. It is forbidden to use them as a means of payment.
In January 2022, the Central Bank of the Russian Federation proposed to ban financial institutions from investing in cryptocurrencies and related instruments. And in December, the head of the regulator, Elvira Nabiullina, opposed the use of Russian financial infrastructure for transactions with cryptocurrencies.
She assured that the regulator can implement this restriction. In the same month, the Central Bank reported that the provision of services related to crypto assets by financial organizations does not meet the interests of investors and carries great risks.
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