Bitcoin as legal tender has seen both sides. One supported the cause, the other condemned it.
Bitcoin’s legality depends on each nation’s legislation. El Salvador legalized Bitcoin. But regulators blocked it. A country’s currency legislation recognizes an asset to pay off debt. Bitcoin is not legal money, although several nations accept it as a currency.
Bitcoin is taxed as property and not legal currency in the US. It can buy things, however. Governments pass legal tender laws to standardize currency and manage the money supply.
Bitcoin is a decentralized digital money. Bitcoin defies legal tender. Countries are legalizing Bitcoin and other cryptocurrencies as their usage grows. El Salvador accepted Bitcoin as legal money early on. The Central African Republic legalized Bitcoin first in Africa.
Last year, the IMF highlighted concerns about Bitcoin as legal money.
On Feb. 23, IMF issued a study listing many reasons why cryptos like Bitcoin should not be legal money. The “Elements of Successful Policies for Crypto Assets” research established nine policy principles to address macro-financial, legal and regulatory, and international coordination challenges.
“By adopting the methodology, policymakers may better limit the risks presented by crypto assets while simultaneously embracing the potential advantages of the technical innovation connected with it,” Imf noted.
Bitcoin’s path to legal tender has certain obstacles. Secondly, Bitcoin’s price volatility makes it unreliable as a currency. Users and merchants are unsure since its value fluctuates rapidly.
Second, Bitcoin’s absence of a central body that supervises its issuance and circulation makes it susceptible to money laundering, terrorist funding, and other criminal activities. This might threaten financial system integrity and global financial stability.According to Messari, fiat currency is utilized 800 times more for money laundering than Bitcoin.
Lastly, Bitcoin’s restricted legal tender status may limit its usage as a medium of trade. The crypto community supports IMF crypto narratives. One user tweeted: Another user described nations embracing Bitcoin despite censures.
Twitter user and Bitcoiner Carl B Menger was happy that nations may “do their best for their population” without the IMF.
CoinsPaid CMO Dmitry Ivanov told BeInCrypto that the situation was neutral.
Ivanov claimed the IMF recently advised policymakers to limit digital currencies to protect monetary sovereignty in an email. As a developing trend, the monetary fund recommended nations not to award crypto legal tender status. This attitude contradicts financial freedom and decentralization, which digital currencies like Bitcoin seek to institutionalize.
The IMF wants to consolidate bitcoin like the US Dollar. This will provide a framework for taxes, legal hazards, oversight, and crypto market players. Although this may raise the entrance hurdle, it cleans the market of fraudsters and protects investors.
He decided that Bitcoin has matured enough to reach mainstream, notwithstanding its volatility.
The IMF agrees: no. The industry requires improvement or regulation to eliminate bad actors. Bloomberg interviewed IMF Managing Director Kristalina Georgieva, who favoured crypto regulation.
Georgieva then clarified that the IMF may be interested in digital assets but would follow the laws. “If the regulation is delayed and crypto assets become a larger danger for consumers and potential for financial stability, the possibility of banning it (cryptocurrencies) should not be removed off the table,” Georgieva said.
Regulators are regulating the decentralized space. The Financial Stability Board (FSB), International Monetary Fund (IMF), and Bank for International Settlements (BIS) will publish papers and recommendations on global crypto regulatory standards.