IMF calls on El Salvador to stop using Bitcoin as legal tender, memes fly in response
The International Monetary Fund board has urged El Salvador to stop using Bitcoin as legal tender because it introduces large risks to financial stability.
The IMF's warning to El Salvador to drop Bitcoin came after its value fell to a six-month low this week only to rebound slightly on Tuesday.
El Salvador in September became the first nation to adopt Bitcoin as legal currency after President Nayib Bukele won support for his controversial bitcoin bill. The country's acceptance of Bitcoin as currency was criticized by the IMF and World Bank. Today, retailers operating in El Salvador, including McDonald's, Starbucks and Pizza Hut, accept Bitcoin, which consumers use with the country's Chivo wallet.
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"Since September 2021, the government has adopted Bitcoin as legal tender. The adoption of a cryptocurrency as legal tender, however, entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities," the IMF board said.
Bukele announced via Twitter on Friday that El Salvador had capitalized on Bitcoin's fall by buying 410 bitcoin for $15 million, adding to its existing stock of over 1,500 BTC, Coindesk notes.
The president mocked the IMF's statement on Twitter with a Simpsons-themed meme containing the text: "I see you, IMF. That's very nice".
Earlier, in response to Bitcoin's price drop, Bukele posted a image of himself in a McDonald's worker's uniform in an apparent nod to the joke that when crypto prices fall, traders need to get a 'real job', like flipping burgers.
#NewProfilePic pic.twitter.com/YVDlBoA2Cq
— Nayib Bukele 🇸🇻 (@nayibbukele) January 22, 2022
Elon Musk, a fan of alternative cryptocurrency Dogecoin, responded to Bukele's McDonald's joke with the tweet: "I will eat a happy meal on tv if @McDonalds accepts Dogecoin". McDonald's official Twitter account replied to Musk: "only if @tesla accepts grimacecoin".
McDonald's tweet about Grimacecoin, then a non-existent cryptocurrency, spawned several grimacecoins, according to CoinDesk.
On a more serious note, the IMF board commended Chivo wallet's potential impact on financial inclusion. However, it also said the country needed "strict regulation and oversight of the new ecosystem of Chivo and Bitcoin."
The IMF highlighted the "large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities" and called for El Salvador to "narrow the scope of the Bitcoin law by removing Bitcoin's legal tender status."