There has been some noise on the matter of adopting cryptocurrencies as legal tender since the elevation of Bitcoin in El Salvador. IMF, which has been known to issue loans to the country, has been critical of the idea and has dismissed the step as a silly experiment.
Recently, the board of IMF has ruled with a majority vote that cryptocurrencies should not be used as legal tender.
The international loaning bank has noted that it imposing an outright ban on crypto is not ideal. However, the possibility should not be ruled out entirely. The board has reached a new conclusion that the member countries of the IMF should be discouraged from partaking in crypto trading.
Risks Associated with Cryptocurrencies
The directors of the IMF have received a circular that briefed them on the dangers of cryptocurrencies on tax collection, financial stability, consumer stability, and monetary policy. The 24 elected directors have agreed with a majority vote not unanimously that cryptocurrencies should not be allowed as legal tender for the sake of monetary sovereignty.
With this latest move, IMF has started to pressure its member countries to fix their tax collection procedures to accommodate the latest decree.
The directors have agreed that a strict exodus from cryptocurrency markets is not the preferred choice. However, the international bank has claimed that countries should not rule it out entirely.
IMF has maintained that at present there is an increasing rise in cryptocurrency adoption. On this account, the corporate structure of the world is changing and there is an emergence of an international financial market based on peer-to-peer trading networks. The firm exclaimed these changing dynamics require policy changes.
The International Bank has formerly expressed the concern that some investors may use DeFi to break out of the capital control systems.
The firm has criticized El Salvador on several occasions on account of its adoption of Bitcoin as a legal tender. Meanwhile, IMF has maintained that regulatory injunctions should not meddle with innovation and progress.
