El Salvador is preparing to allow the acceptance of Bitcoin by merchants to become voluntary, easing involvement in the underused Chivo wallet, and limiting public sector economic activities related to Bitcoin as part of a $1.4 billion loan agreement with the International Monetary Fund.
This Central American country will receive $1.4 billion from the IMF over the next 40 months after El Salvador agreed to measures aimed at reducing the public debt ratio to GDP, according to a December 18 announcement from the global lender.
The potential risks of the Bitcoin project will be significantly mitigated according to the Fund's policies. Legal reforms will make the acceptance of Bitcoin by the private sector voluntary,” stated the IMF.
For the public sector, participation in economic activities related to Bitcoin, trading, and buying Bitcoin will be limited.
El Salvador began buying Bitcoin in 2021, with the tracking tool from the National Bitcoin Office showing that they currently hold 5,968.8 Bitcoin, worth approximately $602 million.
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Bitcoin News has contacted the National Bitcoin Office of El Salvador for comments but has not received an immediate response.
The IMF also stated that taxes will only be paid in USD — the official currency of the country — and government involvement in the state-backed crypto wallet Chivo “will be gradually reduced.
This agreement still requires the approval of the IMF Board of Directors, but it marks the end of four years of negotiations overshadowed by President Nayib Bukele's acceptance of Bitcoin (BTC) as legal tender in June 2021 — making El Salvador the first country in the world to do so.
Source: IMF
The IMF has long urged Bukele to abandon the Bitcoin plan, arguing that the speculative nature of this cryptocurrency could place the country at risk.
This agreement will also witness additional loans from other global banks, including the World Bank, for a total funding package of over $3.5 billion.
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In response to the IMF's announcement, Bukele's Bitcoin advisor, Max Keiser, stated on X that “no one cares about these bastards” and called the agreement “bureaucratic nonsense.”
The use of Bitcoin in El Salvador has always been voluntary and its usage has never been higher and continues to grow, Keiser said in another post on X. “The IMF's point is dead before it gets there.”
However, an October survey of Salvadorans showed that 92% do not transact in Bitcoin — up from a 2023 survey indicating that 88% do not use Bitcoin for transactions.