The International Monetary Fund’s executive board has urged El Salvador to narrow the scope of its Bitcoin law by terminating the cryptocurrency’s legal tender status, as bitcoin lost half of its value from its record high in November.
Board directors highlighted the risks of bitcoin adoption in El Salvador, which took up bitcoin BTCUSD, -0.20% as a legal tender in September, on its financial stability, financial integrity, consumer protection, and the associated fiscal contingent liabilities, according to a Tuesday report that evaluates El Salvador’s economy.
The IMF stressed the importance for El Salvador of providing strict regulation and oversight for the new ecosystem containing bitcoin and the country’s Chivo wallet, a government-backed crypto wallet that helps facilitate bitcoin transactions. However, they also highlighted the Chivo wallet’s potential role in boosting financial inclusion.
El Salvador holds more than 1,500 bitcoin and plans to issue a $1 billion, 10-year bond backed by bitcoin this year.
Bitcoin is recently trading at around $36,959, almost half of its record high of $68,990.
In face of the bitcoin price downturn, El Salvador president Nayib Bukele, who pushed forward the country’s bitcoin adoption, briefly changed his Twitter profile on Monday to that of a McDonald’s employee, in reference to an internet meme, where crypto HODL’ers indicate their future career prospects when bitcoin plunges. McDonald’s pays as low as $11 per hour.