IMF needles El Salvador over Bitcoin risks, lack of transparency

The International Monetary Fund continued to criticize El Salvador’s use of Bitcoin as legal tender in a report Friday, but acknowledged the worst risks “have not materialized.”

After the Central American nation adopted Bitcoin as legal currency in 2021, the IMF cut El Salvador off from potential its funds.

In its latest report, the body said El Salvador’s government should be more transparent with its Bitcoin purchases. The government of President Nayib Bukele does not disclose its Bitcoin buys.

However, Reuters estimates that El Salvador paid $106.4 million to acquire about 2,470 coins. Now, those coins would be worth about $52.2 million, Reuters found.

“While risks have not materialized due to the limited Bitcoin use so far,” the IMF stated, “underlying risks to financial integrity and stability, fiscal sustainability, and consumer protection persist.”

El Salvador’s economy grew an estimated 2.8% in 2022, according to the IMF report.

Many Salvadorans have protested Bukele’s policies including the move to Bitcoin. Though Bitcoin remains the most stable cryptocurrency, it still lost significant value during the “crypto winter” of 2022.