IMF says bitcoin will never become legal tender

The International Monetary Fund (IMF) has announced its position on the recognition of bitcoin as legal tender. The agency said no to payments in cryptocurrency and gave the green light to regulators.

The possibility of using BTC for payments has been discussed for years. Some well-known adherents of the flagship cryptocurrency, such as El Salvadoran President Naib Buchele, have been actively promoting BTC as an alternative to the inflation-prone fiat. However, regulators, including the IMF, are not so optimistic.

In order for bitcoin to be considered a means of payment, a country’s currency legislation must recognize it as suitable for repayment of debt obligations. El Salvador and the Central African Republic pioneered the mass adoption of BTC, as both countries equate the cryptocurrency’s functionality with fiat. Some countries recognize BTC as a means of exchanging goods and services. For example, in the United States, BTC is considered property and is taxed.

However, these arguments are not enough for the IMF. on February 23, the fund published a document in which it outlined various reasons for not accepting cryptocurrencies as a means of payment. The report, titled «Elements of an Effective Crypto Asset Policy,» presented a system of principles that address macrofinancial, legal, and regulatory issues, as well as international coordination regarding digital currencies:

• Protect monetary sovereignty, do not grant digital assets the status of official currency or legal tender;
• Beware of excessive volatility of capital flows and maintain effective capital management measures;
• Analyze fiscal risks and adopt an unambiguous tax regime for cryptocurrencies;
• Establish legal certainty for digital assets and eliminate legal risks;
• Develop and enforce regulatory requirements from all industry participants;
• Create a common monitoring system between different national agencies and authorities;
• Develop international cooperation mechanisms to strengthen oversight and ensure compliance with crypto regulation;
• Monitor the impact of the new asset class on the stability of the international monetary system;
• Strengthen global cooperation to develop digital infrastructures and alternative solutions for cross-border payments and financing.

The IMF emphasized that cryptocurrency regulation «must be reasonable» so as not to stifle innovation, and the public sector can use some of the underlying technologies of crypto assets for its own public policy purposes.