The Silicon Valley venture capital firm Andreessen Horowitz (a16z) released a report on Tuesday covering the current state of crypto adoption. It highlights Ethereum as the leading blockchain network for developer support but contains very little mention of Bitcoin’s growth. The Potential of Web 3 The VC firm broke boiled down its report into five key takeaways about the current state of crypto. It began by suggesting that the industry is in the middle of its fourth ‘price innovation’ cycle.…
The International Monetary Fund (IMF) has re-stated its disapproval of El Salvador’s Bitcoin Law. President Nayib Bukele responded with mockery over social media – as with all of his nation’s critics. Even Edward Snowden called out the institution.
IMF Wags its Finger on Bitcoin
The institution made its grievances public in a statement from its website on Tuesday. Though it recognized El Salvador’s economic solid recovery after the pandemic, it doesn’t think the Bitcoin law is helping:
“The adoption of a cryptocurrency as legal tender entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities,” reads the statement.
These concerns are nothing new: the IMF touched on Bitcoin’s shortcomings as a national currency in a blog last July. However, due to its massive volatility and supposed lack of incentives for use, the institution deemed adopting that sort “a step too far.” Indeed, Bitcoin is currently trading at about $37k per coin – over 50% down from its high under three months ago.
However, Bitcoin has found a unique use case in El Salvador as a cross-border settlement layer. As a nation whose economy is massively remittance dependent, the lightning network has proven a cheap alternative to Western Union. A Tonga MP seeks to implement Bitcoin as legal tender for the same reason.
The IMF has since recognized this and thus displayed apt nuance in its latest criticism of the Bitcoin law. It noted El Salvador’s Chivo-wallet as a “financial inclusion” tool through “digital means of payment.”
Nevertheless, the wallet’s shared ecosystem with Bitcoin was dangerous for the economy and needed strict oversight. As a result, they ultimately recommended that the Bitcoin Law be modified to remove Bitcoin’s status as legal tender.
Bukele Doesn’t Care
The IMF’s criticisms fall on deaf ears: President Nayib Bukele remains committed to using Bitcoin as a currency. However, in a tweet later that day, he mocked the institution in a Simpson’s gif of Bitcoiners casually ignoring them.
He wasn’t the only one: famous whistleblower Edward Snowden beat him to it, calling out the IMF for being scared of Bitcoin’s growth.
Unlike most politicians, Bukele isn’t mincing words with his detractors. For example, in response to a downgraded sovereign debt score from Moody’s last week, he said El Salvador “DGAF.”
Altogether the president’s commitment to Bitcoin shows no sign of slowing down any time soon. He bought another 410 Bitcoin on El Salvador’s behalf on Friday, bringing its total holdings to about 1800 coins.