Bitcoin will support the rise of crime and terrorism, warn Salvador IMF and agencies

The difficulties that Salvador encountered on the first day of the adoption of the cryptocurrency bitcoin as legal tender may not be the only one in the future. The IMF and a number of major rating agencies warn the small Central American state that bitcoin in El Salvador will boost the rise in crime. According to the IMF, cryptocurrencies can disrupt the functioning of the entire country. The portal informed about it CNN.

Protests, technological defects or a sharp drop in prices. All this occurred in Salvador on the day of the adoption of bitcoin as legal tender. About a thousand people protested against the cryptocurrency in the capital on Tuesday. They burned tires and set off fireworks. Only a handful of traders accepted digital currency.

Apple and Huawei app stores did not offer the government-sponsored Chivo digital wallet. The price of the world’s most famous virtual currency fell sharply on the day of adoption, falling to $ 42,921, which is about 919,771 crowns. However, even bigger problems may affect Salvador due to bitcoin in the future.

Households or companies in the country often do not know in what form to keep their money. Salvador does not have its own currency and for many years relied only on the US dollar. Now, however, households have gained a bitcoin alternative to the dollar. However, cryptocurrencies are very prone to price fluctuations. Against the dollar, the price of bitcoin changes rapidly and often.

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According to the IMF, bitcoin can contribute to money laundering or the financing of some terrorist organizations. The fund also claims that cryptocurrencies contribute to non-payment of taxes and may threaten the country’s entire financial system.

Some rating agencies also oppose bitcoin. For example, Moody’s said in late July that the investment climate in El Salvador was deteriorating. After the state approved the law on the introduction of bitcoin as currency, Moody’s lowered the country’s credit rating. Salvadoran dollar bonds also came under pressure.

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According to the agency’s experts, the country is now more prone to shocks, which may negatively affect investors. They have even expressed doubts as to whether Salvador will be able to repay its debts in the coming years. The IMF therefore called on all countries in the world to accept cryptocurrencies as official legal tender only if they are able to ensure and maintain their financial stability.

El Salvador’s decision may also be reflected in the aid program, which the country is negotiating with the IMF and which exceeds one billion dollars, which is about 20.9 billion crowns.

According to a June survey by the University of El Salvador, most people in the country do not understand cryptocurrencies at all and are rather skeptical of the president’s move.

But President Nayib Bukele has high hopes for bitcoin. According to him, the cryptocurrency will help create new jobs and will also help the financial integration of thousands of people into legal economies, it should also help the country in the inflow of foreign investment.

It is the foreign finances that is largely dependent on foreign finances. These payments represent about 22 percent of the country’s gross domestic product. Bukele further claims that residents will be able to buy through bitcoin, pay taxes and even buy land.

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