By CLAUDIA TORRENS, Associated Press
NEW YORK (AP) — The International Monetary Fund said Friday that El Salvador should dissolve the $150 million trust fund it created when it made the cryptocurrency Bitcoin legal tender and return any of those unused funds to its treasury.
The recommendation was part of the international lender’s report on El Salvador’s economy and went beyond its statement earlier this week urging El Salvador to drop Bitcoin as legal tender.
The trust fund was intended to allow the automatic conversion of Bitcoin to U.S. dollars — El Salvador’s other currency — to encourage people wary of adopting the highly-volatile digital currency.
The IMF also recommended eliminating the offer of $30 as an incentive for people to start using the digital wallet “Chivo” and increasing regulation of the digital wallet to protect consumers. It suggested there could be benefits to the use of Chivo, but only using dollars, not Bitcoin.
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“In the near-term the actual costs of implementing Chivo and operationalizing the Bitcoin law exceed potential benefits,” the report said.
Salvadoran President Nayib Bukele’s office did not immediately respond to a request for comment, but in recent days Bukele has been dismissive of the IMF’s recommendation’s concerning Bitcoin.
The IMF expressed concern over El Salvador’s growing exposure to Bitcoin’s volatility and urged greater transparency.
Government officials told the IMF that the launch of “Chivo” had significantly increased financial inclusion, drawing millions of people who previously lacked bank accounts into the financial system. They also spoke of the parallel tourism promotion targeting Bitcoin enthusiasts.
The government did not see a need to scale back the scope of its Bitcoin law, but agreed regulation could be strengthened, according to the report.
Bukele led the push to adopt Bitcoin as legal tender alongside the U.S. dollar. El Salvador’s Legislative Assembly made…
