El Salvador’s government rejected the International Monetary Fund’s request to withdraw Bitcoin as legal cash in the Central American country on Monday. Treasury Minister Alejandro Zelaya screamed loudly, “No foreign organization is going to force us to do anything, anything at all.”
Bitcoin, Zelaya told a local television station, is a matter of “sovereignty.”
“Countries are sovereign nations and they take sovereign decisions about public policy,” he said.
The IMF suggested last week that El Salvador dissolve the $150 million trust fund it established when it made cryptocurrencies legal tender and return any unused cash to the country’s treasury.
Concerns were expressed by the agency regarding the volatility of Bitcoin values and the likelihood of criminals exploiting the cryptocurrency. Bitcoin’s value has plummeted after nearly doubling late last year.
El Salvador, according to Zelaya, has followed all financial transaction and money laundering regulations. The trust fund was set up to enable the automatic conversion of Bitcoin to US dollars El Salvador’s other currency in order to entice consumers who were hesitant to use the extremely volatile digital currency.
The IMF also suggested that the $30 incentive for people to start using the digital wallet Chivo be removed, as well as increased regulation of the digital wallet to protect customers. It implied that there might be advantages to utilizing Chivo, but only with dollars, not Bitcoin.
“In the near-term, the actual costs of implementing Chivo and operationalising the Bitcoin law exceed potential benefits,” the report said.
Salvadoran President Nayib Bukele had already dismissed the IMF’s Bitcoin suggestions.
According to government officials, the launch of Chivo has greatly improved financial inclusion, bringing millions of people who previously did not have bank accounts into the financial system. They also mentioned a parallel tourist marketing aimed towards Bitcoin fans.
According to a report, the government did not see the need to reduce the scope of its Bitcoin law, but believed regulation could be improved.
Bukele spearheaded the campaign to make Bitcoin legal tender alongside the US dollar. El Salvador’s Legislative Assembly became the first in the world to pass a Bitcoin law in June, and the law went into effect in September.
For months, El Salvador and the IMF have been discussing a $1.3 billion loan.