It has been over a month since El Salvador legalized the adoption of Bitcoin (BTC) and other cryptocurrencies by passing a parliamentary bill. Following the approval of the bill, the El Salvador Government has started adopting cryptocurrencies and Bitcoin on a larger scale.
As soon as El Salvador passed the law and legalized cryptocurrencies, the regulatory authorities from all over the world expressed their concerns over ES’s decision. The first international regulatory body that opposed the decision by the El Salvador Government was the International Monetary Fund (IMF).
It did not like the idea of El Salvador adopting cryptocurrencies as a means for boosting the economy of the country. The IMF stated that El Salvador had made one of the most alarming decisions for the sovereignty of its country.
As per the IMF, cryptocurrencies are decentralized in nature, are highly volatile, which makes them fully unreliable. These assets are full of risks and can jeopardize the economy of the entire country in the future.
The IMF stated that El Salvador would eventually end up suffering the consequences of adopting cryptocurrencies. The country at present is aiming to make them a national currency as it is aiming to adopt them entirely. Most importantly, El Salvador is aiming to adopt Bitcoin completely.
In the light of the above, the IMF has issued a warning pertaining to the adoption of cryptocurrencies by El Salvador. According to the IMF, the situation would turn out to be extremely consequential for El Salvador if it carries on with the adoption of cryptocurrencies.
The country would end up facing a lot of problems and suffer many consequences. While the majority of the consequences may be of a small scale, some may turn out to be of a very large scale. When that happens, the entire situation would turn dire for El Salvador and for its government.
Tobias Adrian, the director, and financial counselor at the marketing department of IMF is the one who has released the warning on behalf of the firm. Adrian stated that it is true that Bitcoin and altcoins offer many benefits to people.
They have proven to be a useful hedge fund asset in times when the inflation rate is very high. They are volatile in nature, making them very profitable, but these benefits would eventually come with significant costs.
Rhoda Weeks-Brown, the direct and general counsel at the legal department of IMF also commented on cryptocurrencies. As per Rhoda, the cryptocurrency industry is one of the most attractive assets for countries that are fighting with high inflation and facing many problems with exchanges rates.
It is also suitable for people that do not have bank accounts, as they can also perform transactions through the cryptocurrency industry. Still, these factors do not make cryptocurrencies are reliable and a long-term solution for the growth of the economy.