The International Monetary Fund (IMF) has told El Salvador to water down the law enforced last year that made bitcoin (BTC) legal tender – and the country’s President Nayib Bukele has responded with a dismissive Twitter meme using footage from the TV show “The Simpsons.”
Meanwhile, bitcoin is moving up today, despite this latest pressure. At 9:32 UTC, BTC is up 3.7% over the prior 24 hours, trading at USD 37,824. It’s down nearly 11% in a week.
In a press release, the IMF noted that its directors had “urged” El Salvador to “narrow the scope of the bitcoin law by removing bitcoin’s legal tender status,” adding that “some directors” had “also expressed concern over the risks associated with issuing bitcoin-backed bonds.”
The latter is a reference to Bukele’s grand plans to create a tax-free haven for international BTC advocates named Bitcoin City – and fund it using BTC-backed bonds.
The IMF also noted that there was a “need for strict regulation and oversight of the new ecosystem of the [state-run Chivo BTC wallet] and bitcoin.”
El Salvador has been largely dependent on IMF financial support in recent decades – and the body could well follow up by threatening to cut off or suspend its aid to the Central American nation.
But Bukele appears to believe that his newfound BTC community allies will help him attain what many believe is his ultimate goal – decoupling from the USD and Washington’s sphere of influence.
Samson Mow, the Blockstream Chief Strategy Officer and a key ally in Bukele’s adoption drive, wrote off the IMF’s statement as “irrelevant.”
He shared an excerpt of a video interview where he explained:
“I don’t think these organizations like the IMF and the World Bank are really relevant in a world based on bitcoin. […] They can make money out of thin air. You can’t do that on a bitcoin standard.”
The Twitter account operated by Bitcoin Beach – a resort that has been operating a bitcoin-based economy for several years, and may have inspired Bukele to adopt a nationwide BTC economy – also feted the “bullish” quantity of memes circulating in support of El Salvador.
The account operator shared a meme showing an out-of-control horse flattening a woman who tried in vain to stop its charge – equating the horse with El Salvador and the woman with the IMF.
It also sent a (meme-powered) message of defiance.
The Castle Ventures partner Nic Carter predicted:
“Bitcoin will outlive the IMF.”
Others, meanwhile, suggested that the IMF was trying to close the stable door after the horse had already bolted.
Some suggested that Bukele was becoming a bête noire for the IMF, with one Twitter poster using a famous scene from the movie “The Shining” to illustrate their point.
Furthermore, people argued that this IMF’s move shows exactly why Bitcoin is needed. Dennis Porter, the host of the Smart People Shit podcast, argued that “the IMF having to ask El Salvador to stop using Bitcoin is exactly why this technology is so powerful.” If the country doesn’t comply, the citizens “can still have access to a global financial rail,” he wrote.
But not everyone seemed to think that Bukele’s brash defiance of the IMF and Washington was a wise move.
The bitcoin podcaster and author Anita Posch wrote that the “keys to the some BTC 1,300 held by El Salvador are with the United States company BitGo.”
“International organizations and the United States government could force BitGo to cut off El Salvador’s access to its custodial cold storage. Who has the keys to the funds of Salvadorans using the Chivo wallet?”
Leo Wandersleb, the Founder of WalletScrutiny, concurred, writing:
“[Bukele is] poking the bear, but as far as I can see, he’s sleeping in the bear’s cave. I would have nightmares non-stop being this kind of vulnerable to a hostile nation.”
Some have suggested that this year will see other nations join El Salvador in its adoption drive. In its outlook report for the year, CoinShares stated that other “comparably situated sovereigns” are probably carefully watching to see what economic benefits may result from El Salvador’s BTC adoption.
Indeed, the firm noted, the nation now appears to be playing the role of the canary in the coal mine for other nations, who are keenly following its progress from the sidelines.
The report’s authors wrote:
“If the data coming out of El Salvador later this year show significant benefits from including bitcoin in the national currency selection, other countries will soon follow suit.”
– IMF Warns El Salvador
– Hard to Regulate Crypto Without Global Consensus, Admits Top IMF Official
– Expat Salvadorans ‘Clash’ in LA Park over Bukele, Bitcoin
– New El Salvador Laws Will Help Bitcoiners Who Want to Move to the Country, Says Gov’t
– El Salvador Bitcoin App Should Have Been Audited Long Ago, Claims Ex-Central Bank Chief
– US ‘Could Hit El Salvador’s Chivo Bitcoin Wallet with Sanctions,’ Claims NGO