El Salvador is making moves to increase its Bitcoin (BTC) projects, defying the International Monetary Fund’s (IMF) recommendation on its crypto investments. The Central American nation made headlines in September 2021 after becoming the first country in the world to announce Bitcoin as legal tender, prompting the global monetary body’s opposition to the move.
Strengthens Bitcoin Regulations
The National Commission on Digital Assets (CNAD) President Juan Carlos Reyes announced that the CNAD law had undergone significant changes thanks to the efforts of El Salvador lawmakers. Reyes added that these modifications will allow the CNAD to oversee digital asset firms that do business in El Salvador and would represent a significant change in the country’s regulatory environment for digital assets.
The goal of these reforms is to establish El Salvador as a global leader in the adoption and governance of digital assets by introducing a risk-based regulatory framework.
Enhancing Regulatory Expertise
In a statement accompanying the announcement, Reyes emphasized the importance of combining regulatory knowledge with practical experience. He noted that the team at CNAD would make sure that the Bitcoin industry was regulated fairly and efficiently.
Reyes hinted at potential improvements to its crypto laws and pledged to provide more details about the proposed regulatory framework in the upcoming weeks.
Building New Capital Markets on Bitcoin
Furthermore, the country’s National Bitcoin Office (ONBTC) declared in conjunction with CNAD’s regulatory modification that El Salvador is actively planning to create new Bitcoin-based capital markets. This move further demonstrates El Salvador’s belief in the long-term potential of cryptocurrencies.
The ONBTC emphasized that Bitcoin presents a chance for citizens to enable self-custody of their assets and money. This strategy is in contrast to other frameworks for digital assets that put transaction speed ahead of financial sovereignty.
IMF and External Criticism
Meanwhile, Julie Kozack, Director of the IMF Communications Department, has emphasized that El Salvador’s BTC initiative is still a hot topic of debate. Accordingly, the IMF recommended that the country should reduce the public sector’s exposure to cryptocurrencies, tighten regulatory oversight, and limit the reach of El Salvador’s Bitcoin legislation.
The IMF’s advice remains unchanged even though it acknowledged that some of the risks associated with El Salvador’s crypto experiment have yet to come to pass. The main worry expressed by the IMF is the possibility of economic instability brought by an excessive dependence on a volatile digital asset.
Nonetheless, the crypto community has continued to express its support for El Salvador’s pro-Bitcoin position. Notably, Mathew Sigel, head of VanEck’s digital assets, argued that the IMF’s recommendations would impede El Salvador’s development should the country implement them.
He maintained that the IMF’s strategy would prevent the Central American nation from taking full advantage of its progressive Bitcoin policies.
Bitcoin’s Long-Term Investment Potential
Meanwhile, prominent crypto advocate Scott Melker (or “The Wolf of All Streets”) has highlighted the benefits of dollar-cost averaging (DCA) for Bitcoin investments. Melker noted that DCA could prove to be a very successful long-term strategy for investors who joined the cryptocurrency market during its strong, bullish season.
In his analysis, Melker explained that investors who started buying $100 worth of Bitcoin every week in November 2021, when the asset hit its peak of $69,000, would have invested $15,200 over 152 weeks. Even though they began investing during the height of BTC’s value, they have gained over 107% in value.
Furthermore, this perspective aligns with BTC’s price history, which noted a significant drop after hitting $69,000. Notably, BTC’s price fell below $20,000 by the end of 2022.
However, it started to bounce back in 2023, ending the year at $42,258. More importantly, it has carried on with its upward trend into the first part of 2024. By reaching a new all-time high of $73,600 in March 2024, Bitcoin demonstrated its continuing potential for investors who are prepared to take a patient, long-term approach.
The post El Salvador Rejects IMF Warning, Increases Bitcoin Investment first appeared on CryptocyNews.com.
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