Energy tax and legal clarity will be the central setting

The International Monetary Fund (IMF) is seeing an increasing number of cryptocurrencies under increasing scrutiny amid the rise in adoptions in countries. While many countries are exploring digital assets to diversify their economies, the IMF highlights careful regulations, particularly risks related to energy consumption and legal frameworks.

Pakistan’s Bitcoin Ambitions and IMF Concerns

Just recently, Pakistan officially announced its strategic Bitcoin Reserve at the Bitcoin Vegas 2025 conference. The country has revealed plans to hold Bitcoin as a long-term investment and integrate digital assets into the economy. The Pakistani government also aims to use excessive electricity to convert idle energy into economic value.

The Pakistan Digital Assets Authority (PDAA) regulates the crypto business, and the National Cryptocourse Council, established in early 2025, monitors the digital asset sector. In particular, Binance founder Changpeng Zhao joined the council as an advisor to help shape cryptographic regulations and blockchain infrastructure development.

Despite this advancement, the IMF is concerned about Pakistan’s cryptocurrency approach. According to a local report, Pakistan is facing an ongoing energy shortage, and the IMF is questioning whether Bitcoin mining will lead to power failures. The fund is requesting an explanation from Pakistan’s Finance Ministry on managing electricity consumption by miners and data centres.

IMF proposals on energy tax and environmental impacts

In another development, IMF economists Shafik Hebous and Nate Vernon-Lin recently published a paper proposing an increase in energy taxes to curb carbon emissions from crypto mining and AI data centers. This paper recommends that electricity prices rise by 85% for cryptominers around the world. The tax could generate $5.2 billion a year, potentially reducing 100 million tonnes of carbon emissions, equivalent to Belgium’s current emissions.

The IMF’s total crypto mining and electricity demand from data centers accounted for 2% of global electricity in 2022, and is expected to rise to 3.5% by 2027.

Following this, the IMF proposes a targeted electricity tax. This is slightly lower in data centers due to the use of more environmentally friendly energy. The funds raised could promote energy-efficient equipment and encourage less energy-intensive mining methods. The IMF also supports crediting renewable energy certificates.

Today, many crypto miners and data centers benefit from income and property tax exemptions and incentives despite environmental impact and burdens on the grid. The IMF warns that without these taxes, the net profits of the Cryptocurrency Special Tax Regime will remain unknown. It highlights the need for international coordination to prevent miners from moving to countries with low energy taxes.

Lessons from El Salvador’s Bitcoin Policy and IMF Conditions

As is known, El Salvador was the first country to adopt Bitcoin as its fiat currency. Despite signing an agreement with the IMF to limit the purchase of Bitcoin, Nayib Bukele appears to be an adoption. We saw ongoing purchases for IMF advice. The IMF has insisted restrictions, including halting the acquisition of additional Bitcoin and limiting government involvement.

Source: Nayib Bukele Portfolio Tracker

Last month, El Salvador acquired 30 BTC, increasing its reserves above 6,196 BTC, worth more than $650 million. Despite the IMF’s stance, the government remains committed to its Bitcoin strategy.

In an official press release, the IMF completed the initial review of El Salvador’s $1.4 billion loan arrangement and approved a $120 million payment. However, IMF sets the conditions. El Salvador must limit Bitcoin accumulation and halt public access to Chivo Bitcoin wallets by July 1, 2025.

Source: IMF (Press Release No. 25/162)

The IMF emphasized that the government should maintain Bitcoin reserves at current levels without further increase.

IMF’s latest cryptocurrency classification

In early 2025, the IMF updated its Global Balance of Payments Framework to officially include cryptocurrencies. New guidelines, part of the 7th edition of The Balance of Payments Manual (BPM7), categorize digital assets into Fungible and Fungible Tokens and define recordings in international financial accounts.

Similar cryptocurrencies with no Bitcoin and issuer debt are treated as non-optimal capital assets. Cross-border Bitcoin transactions appear in capital accounts as acquisition or disposal of unproductive assets. However, Stablecoins are classified as financial instruments comparable to traditional financial assets.

The IMF also distinguishes crypto assets such as stocks such as Ethereum and Solana. These tokens represent foreign equity investments when held internationally. The guidelines suggest that the compensation from these holdings is similar to dividends and should be recorded accordingly.

IMF’s view on the security classification of Altcoins

The IMF recent report indirectly classifies certain Altcoins as securities that support debt. The Bitcoin mining process is removed from the responsibility classification, but utility tokens fall into this category. This distinction is consistent with ongoing regulatory debates, such as the US SEC lawsuit against Ripple’s XRP token.

A US court held that the sale of XRP to institutional investors was the provision of unregistered securities, but sales on public exchanges were not. Following the IMF classification, industry experts speculate that XRP will be considered security forever. Ripple’s CTO argued that if XRP qualifies as a utility token or security, Bitcoin and Ethereum also conform to their definitions, reflecting the complexity of cryptographic classification.

IMF’s careful approach to cryptocurrency explained

The IMF maintains a cautious, regulatory centric attitude towards cryptocurrencies. It urges the country to impose a target tax on energy use by crypto miners and data centers, manage environmental impacts and impose a target tax.

The IMF closely supports monitoring digital asset holdings, as seen in the agreement with El Salvador and in scrutiny of Pakistan’s Bitcoin reserve plan. The fund’s latest cryptocurrency classification reflects the growing role of digital assets in the global economy, emphasizing transparency and fiscal discipline.

Cross-border adjustments on energy taxation and regulatory standards remain a priority to avoid jurisdictional arbitration. As countries like Pakistan and El Salvador move forward with adoption of Bitcoin, the IMF conditions and warnings highlight the challenges of balancing innovation, energy consumption and financial stability.