HPG suggested that El Salvador “consider” its plans for Bitcoin after a recent visit to the country.
A global financial watchdog has advised El Salvador to exercise caution in expanding government influence over Bitcoin.
BTC
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Due to the “speculative nature” of the crypto market.
The International Monetary Fund (IMF) said in a statement on February 10 that the risk of Bitcoin to El Salvador has not been “realized” due to the “limited” use of Bitcoin. HPG officials visited the country recently.
HPG said Salvadoran Bitcoin should address the country’s financial stability and consumer protection, as well as risks to integrity and financial stability.
It is important to recognize these risks, as it has been indicated that the use of Bitcoin in El Salvador “may grow” as it is recognized as a legal tender in the country from September 2021.
El Salvador has been prompted to reconsider its decision to issue open-ended bonds as HPG said it should be “avoided” due to legal and financial risks. In the statement:
“Given the legal risks, financial fragility and large-scale speculation of the crypto market, authorities should reconsider plans to expand the government’s exposure to Bitcoin, including the issuance of bonds.”
The demand for “more transparency” from the Salvadoran government also highlighted Bitcoin transactions and the state’s “financial situation” of Bitcoin wallet Chivo.
Related: Salvador’s Bitcoin Decision: Tracking Adoption One Year Later
This follows recent news that El Salvador has created a legal framework for a Bitcoin-backed bond called the Volcano Bond.
The Salvadoran government said the bond will be used to pay off sovereign debt and finance the construction of the proposed Bitcoin City.
Bitcoin City is part of Salvador’s plan to continue attracting crypto investors. Previously, the priority for the country in 2023 was to solve any crime related to cryptocurrency.
DitoBanx CEO Guillermo Contreras previously told Cointelegraph on January 6 that the opening of a national Bitcoin office in El Salvador will act as a “central organization” to solve these problems.
