Key Points
- Bitwise CIO, Matt Hougan, shares insights from the IMF’s Bitcoin Payments Report.
- Bitcoin is increasingly used in countries with limited access to the global economy, and the IMF shows interest in Bitcoin.
Matt Hougan, CIO of Bitwise, has commented on the recent Bitcoin (BTC) payments report by the International Monetary Fund (IMF).
Bitcoin’s Role in Economic Freedom
Hougan discusses how Bitcoin, the top cryptocurrency by market capitalization, is commonly used in countries with restricted access to the worldwide economy.
These nations, burdened by capital controls, resort to BTC as a means of value release. Hougan emphasizes this point, supporting a recurring statement in the IMF Working Paper.
The IMF observed that Bitcoin’s cross-border flows are significant relative to the GDPs of certain countries, especially those with relatively small capital flows.
This perspective is credible as individuals, governments, and organizations perceive Bitcoin as a tool for economic freedom. This is evident in the BRICS bloc, where countries like Brazil, Russia, India, China, South Africa, and recent addition Saudi Arabia, are challenging dollarization by promoting Bitcoin as a payment method.
Hougan’s second insight pertains to the slow acceptance and adoption of Bitcoin payments in the United States compared to traditional capital flows. He notes that the US is a significant outlier in this regard, stating that our perspective does not reflect everyone’s reality.
US and IMF’s Stance on Bitcoin
The report includes a chart comparing cross-border Bitcoin flows to flows into traditional investment products by GDP. The US shows the highest dominance in traditional funds, whereas countries like Venezuela and Ukraine are among the largest users of cross-border Bitcoin settlements.
The US attitude towards Bitcoin is evident in its regulatory actions against crypto exchanges and digital asset projects. Both Binance and Coinbase faced challenges with the Securities and Exchange Commission (SEC) in June 2023, being accused of operating as unregistered brokers.
Since then, many other exchanges have faced similar issues, highlighting the US’s efforts to curb crypto adoption.
Lastly, Hougan points out that the IMF’s interest in Bitcoin is evident from the resources and effort invested in the research paper. However, this contrasts with the IMF’s previous warnings to nations like El Salvador about legalizing Bitcoin as a legal tender. The IMF advised El Salvador to repeal its Bitcoin law, a condition attached to a loan the Central American nation is currently seeking from the IMF.
This contradiction casts doubt on the claim that the IMF is genuinely interested in Bitcoin.
