IMF Warns Countries Not to Recognize Cryptocurrencies as Legal Tender

"The Effectiveness of Monetary Policy May Decline
and Financial Risks Could Intensify"

The International Monetary Fund (IMF) has urged countries not to grant legal tender status to cryptocurrencies.

On the 23rd (local time), Reuters reported that the IMF released a policy document titled "Effective Policy Elements for Crypto Assets," containing nine guidelines to assist member countries in responding to cryptocurrency policies. The policy proposals were announced at the 1st G20 Finance Ministers and Central Bank Governors Meeting held on the 24th and 25th in Bengaluru, southern India. Representatives from G20 member countries, the IMF, and international organizations such as the Organisation for Economic Co-operation and Development (OECD) also attended the event.

The key issue emphasized was that countries should strengthen their monetary policy frameworks to protect monetary sovereignty and stability and should not grant cryptocurrencies legal tender or official currency status.

El Salvador is the first country in the world to adopt Bitcoin as legal tender. When it made this decision in September 2021, the IMF strongly criticized it. As the IMF warned, the price of Bitcoin was $47,000 (approximately 61.34 million KRW) at the time of El Salvador’s legal tender adoption announcement, but after a sharp decline last year, it is currently around $23,000 (approximately 30 million KRW).

The announcement also included calls for countries to reach international agreements to strengthen related supervision and regulatory enforcement and to establish measures to monitor the impact of cryptocurrencies on the stability of the global monetary system.

The IMF stated that it cannot simply observe the current situation as numerous crypto assets and exchanges have collapsed in recent years and identified this issue as a priority for the IMF.

Furthermore, IMF directors generally agreed that if cryptocurrencies are widely used, they could reduce the effectiveness of national monetary policies and exacerbate financial risks, and that cryptocurrencies should not be granted legal tender status.