A 44-Nation Bitcoin Gathering in El Salvador May Draw IMF Ire

Key Insights:

• El Salvador continues to grab the crypto news headlines, with President Nayib Bukele driving bitcoin adoption at a national level.
• Earlier this year, the International Monetary Fund (IMF) and rating agencies vocalized their views on El Salvador making bitcoin legal tender.
• This week, Bukele announced a 44-nation bitcoin gathering that could draw further comment from the IMF.

Last September, El Salvador became the first nation to make bitcoin (BTC) legal tender. The news raised concerns among rating agencies, the International Monetary Fund (IMF), and even US lawmakers.

Since then, El Salvador President Nayib Bukele has taken bigger strides into the bitcoin space.

In March, El Salvador planned to launch Bitcoin bonds before having to delay the launch further. Bukele intended to use proceeds from the bond sales to purchase more bitcoin and fund a ‘Bitcoin City.’

This week, Bukele was back in the news, announcing a bitcoin gathering in El Salvador.

El Salvador to Host a 44-Nation Bitcoin Gathering Today

Over the weekend, President Bukele announced a 44-nation gathering in El Salvador to discuss several hot topics, with bitcoin among them.

Nayib Bukele took to Twitter, saying,

“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout, and its benefits in our country.”

The President then went on to list the attendees, including central banks across Latin America, Asia, and Africa.

Central Bank of Eswatini
Ministry of Finance of Eswatini
Central Bank of Jordan
Central Bank of The Gambia
Comisión Nacional de Bancos y Seguros de Honduras
Direction Générale du Trésor, Ministère des Finances et du Budget, Madagascar
Maldives Monetary Authority

— Nayib Bukele (@nayibbukele) May 16, 2022

 

Last month, Central African Republic lawmakers voted in favor of legalizing crypto and considering bitcoin as legal tender.

The number of nations attending will draw plenty of interest, particularly with agencies such as the IMF.

IMF Likely to Sound Alarm Bell Over 44 Nation Bitcoin Gathering

In January, the IMF called on El Salvador to remove bitcoin as legal tender. The IMF issued a press release warning of the risks associated with the use of Bitcoin on financial stability, financial integrity, consumer protection, and fiscal contingent liabilities.”

There were also concerns over the issuance of Bitcoin-backed bonds.

In February, Fitch Ratings downgraded El Salvador’s Long-Term Foreign Currency Issuer Default Rating (IDR) from B- to CCC.

Fitch Ratings noted that El Salvador has been in discussions with the IMF for a $1.3 billion three-year program. With the IMF calling for El Salvador to remove bitcoin as legal tender, however, the prospects of a $1.3m loan remained slim, supporting the Fitch downgrade. The $1.3 billion is seen as a lifeline to meet short-term debt maturities totaling $1.3 billion in August-October 2022.

There may be concerns over today’s gathering. The risk of bitcoin positions or even bitcoin as legal tender, to the respective economies, would be significant.

President Bukele seems undeterred by the IMF or the latest crypto market setback.

Last week, Bukele announced the purchase of an additional 500 coins with an average USD price of $30,744.

El Salvador just bought the dip! 🇸🇻

500 coins at an average USD price of ~$30,744 🥳#Bitcoin

— Nayib Bukele (@nayibbukele) May 9, 2022

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 5.46% to $29,588, leaving Bukele’s latest BTC purchase underwater.

A bitcoin move through to $30,800 would support a breakout session. Failure to return to $30,800 would leave bitcoin under pressure.