The International Monetary Fund IMF has urged El Salvador to dropbitcoin, citing risks to the nation's financial stability and consumer protection, joining a growing chorus of countries clamping down on private digital currency.
The Central American nation became the first in the world to usebitcoin as legal tender in September alongside the U.S. dollar, with authorities saying it will help save residents remittance commissions and expand financial inclusion.
The adoption of cryptocurrencies has been rocky, with only a fraction of businesses taking bitcoin payments, and technical problems plaguing the government's app.
The IMF said on Tuesday that there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.
It urged authorities to narrow down the scope of the law by removing bitcoin's legal tender status. Advocates of cryptocurrencies say they are an effective hedge against uncertainty and hyperinflation.
Big investors are increasingly dominated by the crypt market, and authorities fear that the highly volatile digital currency could undermine their control of the financial and monetary systems, increase systemic risk, promote financial crime and hurt small investors.
Here is a look at countries that have recently regulated or plan to regulate cryptocurrencies.
Russia's central bank proposed last week banning the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, citizens' wellbeing and monetary policy sovereignty, as well as high energy consumption.
Russia - the world's third largest player in the field of digital currency - has argued for years against cryptocurrencies, saying they can be used in money laundering or to finance terrorism. It gave them legal status in 2020 but banned their use as a means of payment.
Financial firms are not allowed to offer and facilitate sales of cryptocurrencies in the country where cryptocurrencies can't be used for payment, according to Indonesia's Financial Services Authority OJK this week.
The Indonesian Ulema Council MUI, a top body of clerics, likened the trading of cryptocurrencies to gambling last year, and said that using them as means of payment is unlawful in Islam because they carry elements of uncertainty and harm.
The Indian government has said it was looking to ban most private cryptocurrencies in a bill that would allow only certain criptocurrencies in order to promote the underlying technology and its uses.
The central bank is about to launch its digital currency, and has expressed serious concerns about cryptocurrencies.
Prime Minister Narendra Modi said it is important for the democratic nations to cooperate on regulating cryptocurrencies so that they don't fall into wrong hands and corrupt the youth.
Pakistani central bank recommended banning cryptocurrencies earlier this month, arguing that allowing them to be traded would cause capital flight.
After a careful risk-benefit analysis, it emerged that the risks ofcryptocurrencies far outweigh its benefits for Pakistan, it said in a report.
The Monetary Authority of Singapore banned all advertising of digital assets, including ads through social media influencers. They can only be marketable on their own websites and social media platforms.
The trading of cryptocurrencies is risky and not suitable for the general public, the central bank strongly encourages the development of technology and innovative applications of the coin, according to a statement by the MAS.
It said that service providers should not portray the trading of cryptocurrencies in a way that trivialises the high risks of trading in them.
Last week, Spain regulated advertising of cryptocurrencies, including by social media influencers, and required all advertising to include warnings about the risks involved.
Australia said last month it would create a licensing framework for criptocurrencies exchanges and consider launching a retail central bank digital currency.
The licensing framework for digital exchanges will be created by the government this year, allowing the purchase and sale of digital assets by consumers in a regulated environment, authorities said.
Financial institutions and payment companies stopped providing services related to cryptocurrencies in May, as well as in 2013 and 2017 as part of a blanket ban on all transactions and mining of cryptocurrencies in September.
China sees cryptocurrencies as a threat to its sovereign digital yuan, which is at an advanced pilot stage.
China accounted for more than half of the world's supply of digital currency before the ban, and miners moved elsewhere.
The central bank of Turkey banned the use of cryptocurrencies in payments last year, because they said they posed significant risks due to volatile market values, irrevocable transactions, and because they are used in illegal activities.
The central bank of Nigeria has banned local banks from dealing in or facilitating transactions in cryptocurrencies last year, reinforcing restrictions that have been in place since 2017.
The ban has pushed the industry underground, with Nigerians trading between themselves using mobile messaging apps and platforms such as Binance and Paxful. This has opened them up to scams and the risk of arrest.