El Salvador Adjusts Bitcoin Policy in $1.4 Billion IMF Deal

El Salvador will make Bitcoin acceptance by merchants voluntary, reduce its involvement in the Chivo wallet, and limit public sector Bitcoin-related activities as part of a $1.4 billion loan agreement with the International Monetary Fund (IMF). The IMF announced on Dec. 18 that El Salvador would receive $1.4 billion over 40 months to lower its debt-to-GDP ratio. “The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies. Legal reforms will make acceptance of Bitcoin by the private sector voluntary,” the IMF stated. “For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.” Additionally, taxes will continue to be paid in U.S. dollars — El Salvador’s official currency — and government involvement in the Chivo wallet will be gradually phased out. El Salvador began purchasing Bitcoin in 2021 and currently holds 5,968.8 Bitcoin, valued at approximately $602 million, according to the National Bitcoin Office. A spokesperson from the office told Cointelegraph that the country will continue its Bitcoin accumulation strategy. “We will keep buying one Bitcoin a day (likely even more in the future), and we will not sell any of our current holdings,” the spokesperson stated. “The plans for the Bitcoin Office remain the same as Bitcoin continues to be our main strategy.” The agreement, still pending approval from the IMF Executive Board, concludes four years of negotiations following President Nayib Bukele’s adoption of Bitcoin as legal tender in September 2021, making El Salvador the first country to do so. The IMF has consistently urged Bukele to abandon Bitcoin, citing its speculative nature as a potential risk to the country. The deal will also unlock additional loans, including from the World Bank, for a total financing package exceeding $3.5 billion. Reacting to the announcement, Bukele’s Bitcoin adviser Max Keiser dismissed the IMF’s stance, stating on X, “Nobody pays attention to these assh****,” and labeled the agreement “bureaucratic, meaningless nonsense.” Keiser added, “Bitcoin use in El Salvador was always voluntary, and its usage has never been higher and continues to grow.” However, a recent survey revealed that 92% of Salvadorans do not use Bitcoin for transactions, up from 88% in 2023.