Bitwise CIO Matt Hougan has shared his thoughts on X on the International Monetary Fund's (IMF) research on Bitcoin (BTC) payments, which was released earlier this month.
Bitcoin as a Financial Independence Tool
The Bitwise executive claims that citizens of nations with restricted access to the global economy primarily use the top cryptocurrency by market capitalization.
These are the countries that choose to use Bitcoin as a release value after experiencing capital controls. Hougan emphasized this important lesson to bolster a recurrent claim made in the IMF Working Paper.
The foreign agency stated that "the estimated magnitudes of the cross-border Bitcoin flows are sizeable with respect to the GDP of several countries, particularly in those where capital flows are relatively small."
Notably, this perspective is not unjustified given that a lot of people, governments, and even some organizations see Bitcoin as a means for achieving financial independence. This is demonstrated by the BRICS bloc, which was recently formed by nations including Saudi Arabia, Brazil, Russia, India, China, and South Africa. These nations are fighting dollarization by promoting the use of Bitcoin as a form of payment.
The second lesson from Hougan concerns the United States' sluggish adoption of Bitcoin payments in contrast to conventional money flows. In this sense, he claimed, the US is an extreme anomaly, pointing out that:
Therefore, not everyone's reality is reflected in our perspective.
US and IMF Suppressing Views of Bitcoin
The study included a chart that compared, by GDP, the flows of Bitcoin into traditional investment products vs those into cross-border transactions. According to this reading, the US has the most extreme domination in traditional funds. However, some of the biggest consumers of cross-border Bitcoin payments are nations like Venezuela and Ukraine.
Interestingly, the way local authorities in the area target cryptocurrency exchanges and other enterprises involving digital assets is a clear reflection of US policy against Bitcoin. In June 2023, Binance and Coinbase Global Inc (NASDAQ: COIN) encountered difficulties when dealing with the Securities and Exchange Commission (SEC). The agency levied charges against both major exchanges for acting as unregistered brokers.
Numerous other exchanges have met a similar end since then, highlighting the US determination to stifling the adoption of cryptocurrencies.
The IMF Working Paper's final salient point for Hougan rests on the fact that the institution is considering Bitcoin. He cited the research paper's resources and effort as evidence for this assertion. In such a scenario, it would be so to say that the IMF has had a change of stance.
The IMF has already issued warnings to countries like El Salvador that permit the use of Bitcoin as legal money. The organization suggested that El Salvador take Bitcoin out of the country's legal cash system. The country in Central America is presently applying for a loan from the IMF, with the requirement that it amend its laws pertaining to cryptocurrency, including Bitcoin.
Regretfully, this adds a distinctive angle that refutes the assertions that the IMF has a favorable interest in Bitcoin.
April 2024, Cryptoniteuae