Why is the IMF so critical of Bitcoin? Why was the IMF so intent on imposing strict anti-Bitcoin conditions over El Salvador? 🤔

Simple. Bitcoin represents erosion of IMF influence over global financial architecture in not one but five key ways. 🔥

1. Loss of Lending Leverage

The IMF provides loans, chiefly though not exclusively to developing nations, often requiring reforms such as "structural adjustments" (such as reducing corporate taxation, currency devaluation, and austerity measures) in return. If Bitcoin enables countries to access alternative funding sources or operate outside the traditional financial system, it diminishes the IMF's ability to impose these conditions and influence economic policies.

2. Disruption of Financial Surveillance

The IMF conducts financial surveillance to (in their words) "assess risks and provide guidance to its members". Bitcoin’s decentralized and pseudonymous nature undercuts the IMF's oversight role, directly weakening its authority and power in the international arena.

3. Undermining the need for Special Drawing Rights (SDRs)

Bitcoin has the ability to replace Special Drawing Rights as a global reserve asset. The IMF uses Special Drawing Rights as a supplementary international reserve asset. Making SDRs less relevant reduces demand for IMF-led financial tools, impacting the institution's ability to coordinate international liquidity.

4. Direct Threat to IMF-Backed CBDCs

Many IMF member countries are developing Central Bank Digital Currencies (CBDCs), often with technical and policy guidance from the IMF. Bitcoin represents an opposing digital currency vision of the future: Simply put, Bitcoin gives more financial autonomy to people; CBDCs centralize more power with Central Banks. The adoption of Bitcoin over CBDCs reduces the IMF’s role in shaping digital "financial innovation" and diminishes its influence over the digital global monetary system.

5. Bitcoin is already weakening the IMF's core business model

The IMF generates revenue chiefly from interest on loans. Bitcoin adoption has already strengthened the economies of Bhutan, El Salvador and Ethiopia, reducing their reliance on IMF programs. More widespread adoption reduces the IMF's customer-base and weakens their core business model of providing loan financing to developing nation states.

For many decades, the IMF has enjoyed a position at the center of the global financial system, working with central banks and governments to influence economic policy. Bitcoin, being decentralized, bypasses these institutions entirely.

Widespread Bitcoin adoption reduces the IMF's ability to act as a gatekeeper and mediator in global financial matters, threatening its relevance.