The loan agreement adjusts the Bitcoin policy, making acceptance by merchants no longer mandatory.
The El Salvador government recently reached a loan agreement with the International Monetary Fund (IMF) amounting to 3.5 billion dollars. As one of the exchange conditions, the country made significant concessions in its Bitcoin policy: Bitcoin is no longer a mandatory payment tool that merchants must accept, and the official Chivo e-wallet will gradually exit the stage. This means that the country's famous Bitcoin experiment will enter a 'correction phase'. The IMF stated that the new policy will reduce the risks that the Bitcoin program may bring, making the monetary system more robust.
However, El Salvador has not completely abandoned Bitcoin. Stacey Herbert, director of the National Bitcoin Office (NBO), stated, 'Bitcoin is not going away, and neither are we.' She emphasized that while the Chivo wallet may be sold or retired, other private sector crypto-related applications can continue to operate domestically. She also shared El Salvador's upcoming plans on X:
Bitcoin is still legal tender.
El Salvador will continue to purchase Bitcoin (possibly at a faster pace) for its strategic Bitcoin reserves.
The Bitcoin capital market will continue to develop, such as the recent issuance of tokenized U.S. Treasury bonds on Liquid via NexBridge, along with more announcements related to the Bitcoin capital market.
The Bitcoin office will continue to formulate Bitcoin policies and roadmaps, attract investors, and promote educational programs, including a new workbook for second and third-grade students targeted for January 2025 (Little HODLer Bitcoin and Currency Workbook).
CUBO+ continues to cultivate top Bitcoin and Lightning developers in El Salvador, with another group of over 20 students set to graduate at the end of January 2025.
Mi Primer Bitcoin and Node Nation continue to conduct teaching in high schools in El Salvador.
ESIAP continues to advance its Bitcoin certification program for 80,000 civil servants.
The Chivo wallet will be sold or phased out, but many private sector Bitcoin wallets will continue to provide services in El Salvador.
Source: Director of the National Bitcoin Office (NBO) Stacey Herbert shares El Salvador's upcoming plans on X
Taxes will only be collected in U.S. dollars; government involvement in Bitcoin activities is limited.
According to the terms of the agreement, in the future, merchant acceptance of Bitcoin will become 'voluntary' rather than mandatory, and the government will impose strict limits on economic activities related to cryptocurrencies and Bitcoin purchases. The IMF pointed out that taxes will only be paid in U.S. dollars and not in Bitcoin. This will significantly reduce the role of Bitcoin in national finance and weaken the originally guaranteed status of 'everyone must accept Bitcoin' established by the legislation.
Although this concession seems to diverge from the previously radical policy, the IMF-approved loan is crucial for stabilizing the economy and reducing debt for a country in urgent need of financial boost. Reports indicate that the 1.4 billion dollars provided by the IMF is only part of the total 3.5 billion dollar plan, with other World Bank and regional development banks also participating, allowing El Salvador to receive more international financial assistance.
El Salvador still holds a large amount of Bitcoin and is expected to continue buying more.
Although this agreement requires the government to reduce its involvement in Bitcoin activities, it does not directly impact El Salvador's own Bitcoin holdings. According to El Salvador's Bitcoin reserve data, the country currently holds over 5,980.77 Bitcoins, valued at approximately 583 million dollars. Stacey Herbert pointed out that the government still plans to continue buying Bitcoin, possibly at a faster pace. Furthermore, education regarding Bitcoin, the development of Bitcoin capital markets, and other blockchain-related projects will not be halted.
Source: https://bitcoin.gob.sv/ El Salvador Bitcoin Reserves
This move reveals the duality of El Salvador's policy: adjusting domestic regulations under IMF financing pressure, making Bitcoin no longer mandatory, while simultaneously retaining Bitcoin as a strategic reserve and an element of financial innovation. Clearly, President Nayib Bukele's belief in Bitcoin has not wavered; it has simply shifted from a 'full national push' to a model led by the private sector, with the government taking a back seat.
Significance for the global crypto industry
The IMF has always been skeptical of El Salvador's Bitcoin plan, fearing that the country bears huge volatility risks. Now, through this loan agreement, the IMF finally brings El Salvador's policy track closer to traditional financial norms. Although this adjustment diminishes the 'purity' of Bitcoin as a legal currency experiment, it also establishes a balanced demonstration for international organizations and the digital currency ecosystem.
Previously, El Salvador became the first country to designate Bitcoin as legal tender in September 2021, which garnered significant attention from the global crypto community. Although its domestic popularity has not met official expectations, this experiment has profoundly influenced other countries' considerations of digital currency positioning. Now, under IMF pressure to adjust policy, it may provide a reference for other countries: on one hand, utilizing crypto technology for financial innovation, but still needing to consider international organization regulations and loan conditions.
In summary, the 1.4 billion dollar agreement between El Salvador and the IMF provides key clues for the direction of crypto policy: national policy shifts from 'radical' to 'compromise', neither fully abandoning Bitcoin nor forcing its integration into daily economic activities. The upcoming market trends, public reactions, and whether other emerging countries will follow suit will continue to be the focus of observation from all sectors.
[Disclaimer] The market has risks, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, viewpoints, or conclusions in this article align with their specific circumstances. Investing based on this is at your own risk.
The article 'Compromise with the IMF for 3.5 billion dollars! El Salvador's official wallet may be retired, but it won't stop buying Bitcoin' was first published in 'Crypto City'
