The IMF body shared its opinion on the risks associated with cryptocurrencies and urged the central banks to never bring rules for cryptocurrencies to use as legal tender.
Bitcoin & other crypto assets are highly volatile and these digital assets are a better way to transfer a “tokenized form of money” without the involvement of a third party or we can say a middleman, unlike traditional digital banking services. Because of the volatile nature of crypto assets, these can’t be used in payment services directly.
On 18 July 2023, The International Monetary Fund (IMF) published a report to address the risk associated with cryptocurrencies used as legal tender.
Through the report, the international body urged the central banks to save fiat currencies from cryptocurrencies and don’t provide any room for these crypto assets to evolve against fiat currencies.
Furthermore, the IMF agency noted that few government agencies in the world are accepting Bitcoin & Ethereum in the form of direct payment for tax collection, fines & debt collection. According to the IMF, such types of activities are very big concerns and may further lead to several new challenges e.g. financial stability risk or rapid inflation.
Earlier this month, the IMF Agency suggested that countries modernize their tax collection system to cover the crypto sector so that corresponding agencies can easily collect tax from the crypto businesses & related activities.
In the past, the IMF agency passed several negative statements against El Salvador. In September 2021, El Salvador brought a Bitcoin bill to legalize Bitcoin use as a legal tender in the country, under the leadership of the country’s president Nayib Bukele.
In Feb of this year, the IMF warned El Salvador against Bitcoin use as a legal tender. The International Bank said that Bitcoin’s use as a legal tender could threaten the country’s fiscal sustainability, consumer protection, financial integrity, and stability.
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IMF says Bitcoin should be never use as a legal tender to save fiats
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