A cloud of doubt hangs over El Salvador's Bitcoin dream following plans to privatize or close the Chivo cryptocurrency wallet created and supported by President Salvador Nayib Bukele when BTC became legal tender in the country in 2021.

According to a post on social media platform X by Stacy Herbert, director of the National Bitcoin Office, the government has decided to sign a $1.4 billion loan agreement with the International Monetary Fund (IMF) to address the controversial issues surrounding El Salvador's Bitcoin dream.

El Salvador's Bitcoin dream is in doubt as Chivo faces potential closure.

While asserting that Bitcoin remains legal tender in the country, Hebert stated that the Chivo cryptocurrency wallet "will either be sold or shut down." However, she did not disclose the number of people still using this digital wallet, which has been in use since September 2021 when the government allowed Salvadorans to make payments with Bitcoin.

El Salvador's Bitcoin dream made headlines in 2021 when the Central American nation announced the establishment of Bitcoin as a legal currency alongside the US dollar, perhaps with the aim of reviving its remittance-dependent economy. While a 2023 survey by the Central American University showed that more than 88 percent of Salvadorans do not use Bitcoin, Hebert reiterated that "El Salvador will continue to buy Bitcoin (possibly at a faster pace) for its Strategic Bitcoin Reserve Fund."

The Chivo cryptocurrency wallet offered a $30 incentive upon launch.

According to Bukele, the chief architect of El Salvador's Bitcoin dream, accumulating Bitcoin is "the least popular measure this government has implemented." However, according to the National Bitcoin Office, El Salvador owns 5,969 bitcoins worth about 582 million dollars. The Chivo cryptocurrency wallet has become the world's first government-run digital wallet, aiming to enhance cryptocurrency adoption.

In the early days, the government offered a $30 BTC bonus to anyone who downloaded and used the Chivo cryptocurrency wallet. Unfortunately, it was followed by widespread fraud and identity theft, with numerous reports of glitches related to the Chivo wallet resulting in the freezing of thousands of accounts. Furthermore, most people who downloaded the Chivo cryptocurrency wallet immediately converted this $30 into fiat currency, and that was all they had to do with Bitcoin.

IMF opposes El Salvador's Bitcoin dream.

The global lending organization IMF has consistently opposed El Salvador's Bitcoin dream since its inception. While acknowledging that the risks associated with BTC adoption may have eased after it was widely adopted by businesses around the world, this global lender claims that "The potential risks of the Bitcoin project will be significantly reduced according to the Fund's policies."

While Bitcoin has made headlines trading above $108,000 in recent weeks, the IMF maintains that "Legal reforms will make private sector acceptance of Bitcoin voluntary. For the public sector, involvement in economic activities related to Bitcoin and transactions in and purchasing Bitcoin will be restricted."

Conclusion

The new loan agreement that El Salvador has signaled to close or privatize the Chivo cryptocurrency wallet aims to support the country's fledgling economy. This global lender has continuously opposed Bukele's pro-cryptocurrency policies, stating that they could become a barrier to expanding financial support. Despite all warnings, Bukele always celebrates on social media when BTC rises after Donald Trump's recent cautious election victory in the United States.

When Bitcoin peaked at $100,000 in early December, Bukele declared that the value of his country's cryptocurrency holdings had doubled. As the rest of the world, especially the cryptocurrency community, celebrated the ascension of a pro-crypto president to the White House, observers were uncertain about the trajectory of El Salvador's Bitcoin dream.

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