⚡El Salvador: Bitcoin U-Turn?⚡

El Salvador will either privatize or close the#Chivocryptocurrency wallet created by President Nayib Bukele when he made bitcoin legal tender in 2021. The announcement came Thursday, after the government reached a $1.4 billion loan deal with the International Monetary Fund that addressed its controversial adoption.

While Bitcoin remains legal tender in El Salvador, Chivo “will be sold or liquidated,” wrote Stacy Herbert, director of the National Bitcoin Office, adding: “El Salvador will continue to purchase bitcoin (possibly at an accelerated pace) for its Strategic Bitcoin Reserve.”

The IMF said Wednesday that under the loan agreement, acceptance of#Bitcoinby the Salvadoran private sector would be voluntary, adding that risks related to the asset “are being mitigated.” “For the public sector, participation in related economic activities and transactions will be limited.”

In 2021, El Salvador became the first country to establish Bitcoin as legal tender, in an attempt to revitalize a dollarized and remittance-dependent economy. On December 1, he acknowledged in a speech that it had been “the most unpopular measure that this government has taken.”

Could this be a change of course to establish Bitcoin as a Government reserve, and arguing that it is “underused” or “inappropriate” to enter into a confiscation process? Are we on the verge of a second-generation #BrettonWoods?