Key Insights
The IMF has reportedly included Bitcoin in its global balance of payments as a part of its Special Drawing Rights (SDR), which is a basket of currencies.
It has also been allegedly buying Bitcoins as a part of the exercise.
Previously, the IMF had stated that it was necessary to tame crypto, which it referred to as the "Wild West."
As a part of its re-financing deal, IMF had also asked El Salvador not to buy Bitcoins in the future.
Four days ago, the IMF released its Balance of Payments Manual (BPM7), where it recognized Bitcoin and other digital assets as "non-produced assets," which is a recognition equivalent to a currency. The classification means the IMF is very likely (or has been) to accumulate Bitcoin for its own reserves.
IMF is a premier multinational forum used to prevent a balance of payment crisis that emerges if the country's financial wealth is not in order. The institution lends money to countries that lack the ability to pay for their global trade or internal financial activities. Over time, it has grown anti-crypto which it feels is a threat to global finance.
The IMF has a basket of currencies called the Special Drawing Rights (SDR) whose certificates are lent to countries that need money. These countries then trade their SDRs to get money from other countries wanting to buy those SDRs.
The IMF is reportedly buying Bitcoin to include it as an asset in its SDR Reserves. If this buying sustains, it would generate a demand for Bitcoin which is expected to match that generated by the US Strategic Bitcoin Reserve. The net value of SDR reserves is approximately $66 billion at present, whereas the US Bitcoin Reserve would buy approximately $7.5 billion BTC per year.
Multiple countries like the USA, Bhutan, China, El Salvador and many others have significant amount of Bitcoin in their balance sheets, which might have forced the IMF to consider Bitcoin as an asset despite calling it an unbacked or zero-value digital asset in the past.
Furthermore, the integration of blockchain technology into the financial system of multiple countries like the USA (proposed integration of XRPL) could replace SWIFT, the currently used inter-bank messaging system used to settle cross-border payments between countries.
Previously, the IMF had asked El Salvador not to buy any more Bitcoins, with the latter refusing the advice in February 2024. President Nayib Bukele said he would be buying Bitcoins for his country with money that is not a part of the IMF deal.
El Salvador is about to take a financing deal from the IMF worth $1.4 billion, which would be spread over 40 months. Like Argentina, the IMF had imposed severe restrictions on the country's financial independence, asking it to restructure its budget as well as stop buying Bitcoins.
The country has nearly 6000 Bitcoins in its reserves, which it had bought bit by bit since 2021. El Salvador was one of the first countries to adopt and legalize Bitcoin (later reversed under IMF pressure), which had served it well. The country had attracted much tourism and investments on the basis of its pro-Bitcoin economy.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.