The only country in the world with Bitcoin that has a legal currency of the nation has been not doing up to expectations. Apart from the falling price of Bitcoin and mounting losses on the previous purchase of Bitcoin using treasury funds, the prominent global body of finance, IMF has warned El Salvador from trading Bitcoin bonds indicating the risk it poses for the already debt-ridden El Slavadorian Economy.
International Money Fund has issued a public statement meeting with El Salvador financial representatives recently. The statement estimates a serious risk due to the approval of new laws by the Legislative Assembly of El Salvador that promotes the use of Bitcoin bonds. Moreover, IMF reveals that the adoption of Bitcoin as a legal tender has still not yielded any tangible benefit for the economy.
Lack of Transparency in using Public Funds
The Law that passed in January this year also includes a series of regulatory frameworks that offers legal guidelines for the operations of digital assets and Bitcoin. The new Bill was presented by the country’s pro-Bitcoin president Nayib Bukele.
The grand highlight that has brought prompt attention to IMF was the establishment of rules that enable the El Salvador government to issue Bitcoin Bonds. The Latin American country is expected to issue Bitcoin bonds worth $1 billion and utilize the fund for the construction of a futuristic Bitcoin City. IMF has not posed any questions about the development of Bitcoin city, however, it believes that there is more transparency is required regarding the transaction and purchase of Bitcoin by the government using public funds.
Bitcoin is not living up to the Hype
Failure in delivering expected basic services by the nation’s digital asset app, Chivo Wallet is another notable point in the IMF statement. Users of Chivo Wallet has complaints of failed transactions, disabled account, and blocked transfers. Moreover, the Chivo Wallet has been misused to execute frauds of more than $12 million. The government continues to insist on using this wallet which needs massive improvement squarely.
Since the adoption of Bitcoin as a legal tender by El Salvador, the economy has not improved as was claimed by president Nayib Bukele who trades Bitcoin using the country’s funds on his smartphone. According to a report from Bloomberg, almost no one in the country is willingly using BTC as means of transaction owning to issues such as delayed confirmation, stuck payments, and violent changes in price to name a few. Moreover, the ground report shows people have not witnessed any considerable change in the growth of the economy since the adoption of BTC.
At the time of writing El Salvador holds an estimated 2554 BTC bought at an average price of $43,255.33. The country’s Bitcoin portfolio is in loss of around -49%, worth $54 million.