The IMF approved a $1.4 billion facility for El Salvador, demanding changes to its bitcoin policy to address concerns regarding financial stability. Key measures include voluntary acceptance of bitcoin by businesses, limiting its public sector accumulation, and regulating the government’s electronic wallets. Despite these changes, bitcoin remains legal tender in the country, as El Salvador seeks a balanced approach to cryptocurrencies.
On March 3, 2025, the International Monetary Fund (IMF) approved a $1.4 billion extended facility for El Salvador to support its economic reform program. This decision followed negotiations in which El Salvador agreed to modify its bitcoin policy in response to the IMF’s concerns. The revised approach includes prohibiting the accumulation of bitcoin and implementing several other measures.
In 2021, under President Nayib Bukele, El Salvador became the first country to recognize bitcoin as legal tender. However, this initiative raised concerns among international financial organizations, particularly the IMF, regarding potential risks to financial stability and consumer protection.
To comply with the IMF’s requirements, El Salvador amended its bitcoin law in January 2025 as part of a financing agreement. Subsequently, the IMF introduced additional constraints on El Salvador, including the following measures:
– Voluntary Acceptance of Bitcoin: Businesses will not be mandated to accept bitcoin for transactions, respecting their preferences and addressing concerns over cryptocurrency volatility.
– Reduction of Bitcoin in the Public Sector: The government will limit the voluntary accumulation of bitcoin within public sectors and restrict the issuance of debts tied to BTC to decrease exposure to market fluctuations.
– Regulation of Public Electronic Wallets: The government will either sell or discontinue its official wallet, Chivo, reflecting a focus on reallocating public resources to allow the private sector to innovate in cryptocurrency-related financial services.
The agreement with the IMF is perceived as a vital step to enhance investor confidence and stabilize the economy. Furthermore, this funding could facilitate additional financing from institutions such as the World Bank and the Inter-American Development Bank. Despite the adjustments, bitcoin maintains its legal tender status in El Salvador, and the government continues to recognize the potential of cryptocurrencies, though it is adopting a more prudent and balanced strategy to mitigate risks.
This treaty illustrates the complexities nations face when integrating bitcoin or cryptocurrencies into their financial systems. It remains to be seen whether El Salvador will adhere to these new conditions or opt to challenge the IMF once more, as seen in December 2024 when the country acquired 1 million euros in BTC.
In summary, the IMF’s recent agreement with El Salvador mandates a significant modification of its bitcoin policies to secure funding. Essential measures include voluntary acceptance of bitcoin, limiting its accumulation within the public sector, and regulation of public electronic wallets. While bitcoin retains its legal tender status, the government’s adherence to IMF stipulations will be crucial for sustaining economic stability and fostering confidence among international investors.
Original Source: www.cointribune.com
