01 Mar 2023 Marsha Tusk
Bitcoin Cannot Become Legal Tender, The IMF States
Bitcoin and the rest of the crypto sector have been battling a use case, which sparked much controversy in the past couple of years – whether crypto assets can be recognized as legal tender.
Some countries like El Salvador have already accepted Bitcoin as a legal tender, while many nations are focusing on deploying digital cash, such as China’s DC/EP stablecoin project. El Salvador’s use case, however, met several serious obstacles both from technological and regulatory standpoints.
Now, the International Monetary Fund (IMF) and its Managing Director Kristalina Georgieva noted that for now Bitcoin cannot be considered as legal tender.
“We are very much in favor of regulating the world of digital money and this is a top priority," Georgieva added.
Where is the answer for Bitcoin?
Legal tender is when an asset is accepted as payment for a debt under the country's currency legislation. Although it is not officially recognized as legal cash, several nations allow the use of Bitcoin as a medium of exchange for goods and services.
The United States currently recognizes Bitcoin as an asset and taxes it just like owning stocks. However, Bitcoin is still not accepted as a legal tender in the US.
Nevertheless, Bitcoin paved the way to be used to pay for products and services, including buying electric cars for a brief moment. Governments, on the other hand, have legal tender legislations set in place in order to provide a uniform unit of transactions and to control the monetary supply.
Bitcoin, on the other hand, is a decentralized digital currency that functions independently of conventional banking and governmental structures. As a result, Bitcoin questions the concept of what is considered legal tender. Countries are recognizing Bitcoin and other cryptocurrencies as legal money as their use and adoption increase. One of the first countries to accept Bitcoin as legal money was El Salvador. In a similar fashion, the Central African Republic made Bitcoin legal tender for the first time in Africa.
The International Monetary Fund (IMF) and other regulatory bodies, however, voiced significant concerns about the legal tender status of Bitcoin last year.
Bitcoin price updates
Despite the turbulence in the past several days, Bitcoin seems to be enjoying the first two months of 2023, as the year started at a price point slightly above $15,000. In just 60 days, Bitcoin’s price managed to peak in the foothills of $25,000, before consolidating around $23,500, which turns out to be a massive support zone for the largest crypto to date.
Interestingly, the latest U.S. consumer confidence report managed to shift some fresh inflow into Bitcoin, which ultimately drove the number one crypto back past $23,500. The increase is also backed by the 14-day relative strength index (RSI), which climbed beyond a ceiling at 54.00.
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