Bitcoin, the world’s largest cryptocurrency, will be legalized in El Salvador within eight days of this article being published, but as the Central American country is in its final days of preparation, it is being watched eagerly by other countries, some of which are considering a walk in her footsteps.

The International Monetary Fund, for its part, continues to send and update its warnings on Twitter.

Alongside the World Bank, the intergovernmental financial body has expressed its disagreement with the legalization of cryptocurrency in El Salvador from the start, raising concerns about the economic and legal risks to the country if bitcoin becomes an official legal tender.

A step too far:

Privately issued crypto assets such as bitcoin carry significant risks. Making it equivalent to a national currency is not a recommended shortcut. Read more on our website #IMFBlog By Tobias Adrian of the International Monetary Fund and Tweet embed: pic.twitter.com/Sk9tOjvhD6

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– International Monetary Fund (IMFNews) August 29, 2021

Quoting an IMF warning posted on Twitter, with a link to last month’s blog, the following:

Crypto assets issued by the private sector such as Bitcoin carry significant risks.

Making it equivalent to a national currency is not a recommended shortcut.

The blog post referred to in the IMF Twitter account covers a range of risks to countries that decide to legalize privately issued digital currencies and adopt them as national currency.

The warning adds:

This is a step too far.

The International Monetary Fund considers that the adoption of crypto assets as a national currency is a step too far and that cryptocurrencies should not be adopted to this extent.

The International Monetary Fund has also warned that the risks of such adoption outweigh the benefits, and emphasized that recognizing bitcoin as a national currency poses a threat to financial integrity in countries that are weak in anti-money laundering and counter-terrorism financing.

The International Monetary Fund continues to warn about Bitcoin:

While the bulk of the blog was devoted to warnings about the financial and legal risks surrounding bitcoin adoption, the report also addressed looming environmental and economic threats.

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The International Monetary Fund statement emphasized the negative environmental impacts of bitcoin mining, which uses a huge amount of electricity, and warned that cryptocurrency adoption could harm consumer protections and negatively affect domestic prices.

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According to the International Monetary Fund, the adoption of bitcoin as a national currency offers an unwanted shortcut out of the escalating economic crisis.

Bitcoin adoption could provide a quick and effective solution to currently struggling economies, by immediately reducing the high costs of remittances, allowing financial inclusion for unbanked citizens, attracting foreign investors and, in some cases, bypassing burdensome sanctions.

El Salvador’s President Najib Bukele, who launched the legislation through parliament in June, took the opportunity to announce that he would not shed tears over the IMF’s rejection.

After initial warnings from the International Monetary Fund, President Bukele said that nothing would stop the adoption of Bitcoin in El Salvador.

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