El Salvador, the first country in the world to recognize Bitcoin as legal tender, has had to scale back its acceptance $BTC to meet the International Monetary Fund (IMF)'s conditions for a $3.5 billion loan.
Bitcoin Policy Changes
The Presidential Administration #NayibBukele has agreed with the IMF on the following key adjustments:
1. Stop Mandatory Acceptance of Bitcoin: Private businesses will no longer be required to support payments in BTC.
2. Only use USD to pay taxes: Bitcoin will no longer be used in the national tax system.
3. Shutdown of the Chivo wallet: The government will stop operating the Chivo electronic wallet, which was implemented to promote the use of Bitcoin.
Bitcoin Still Plays an Important Role
Despite reducing exposure to Bitcoin, #elsalvador it still maintains some core policies:
• Bitcoin remains a legal method of payment.
• The government continues to buy 1 BTC every day to build a reserve fund.
• Projects related to Bitcoin, including education and attracting investment, will continue.
Recently, the government acquired an additional 11 BTC (equivalent to 1 million USD), bringing the total Bitcoin holdings to 5,980 BTC, worth about 580 million USD. With a profit margin of nearly 116%, El Salvador is making about 163.8 million USD from its Bitcoin investment.
Challenges in Bitcoin Adoption
Although the government has offered many incentives, such as giving $30 when using the Chivo wallet, the percentage of people using Bitcoin remains very low. A survey in 2023 showed that 88% of people have no need to use Bitcoin in daily transactions. President Bukele acknowledges this reality but believes that Bitcoin still provides long-term benefits for the country.
Impact and Prospects
The adjustment of Bitcoin policy shows that El Salvador is trying to balance the needs of the national finances and the ambition to make Bitcoin an integral part of the economy. Although it has to compromise with the IMF, the country still maintains its faith in the potential of Bitcoin, promising to continue being an investment and cryptocurrency development hub in the future.#ChristmasMarketAnalysis