El Salvador’s unrealized Bitcoin profits briefly hit $360 million after Bitcoin’s new $106,000 all-time high price. According to a screenshot shared by President Nayyib Bukele, the country’s investment has now provided double returns. According to the shared portfolio, the government has spent over $270 million purchasing Bitcoin, with its cache now worth about $632 million.

The rise signifies a 128% increase before the asset’s price dropped to $104,000. Despite the drop, the country remains with significant profits, drumming the success associated with having a Bitcoin reserve. The country currently holds 5,966 BTC, buying one per day after Bukele declared the initiative in November 2022. Arkham Intelligence data puts its last purchase at $103,190 on December 15.

New IMF loan threatens BTC’s legal tender status in El Salvador

With El Salvador already neck deep in its Bitcoin reserve strategy, the country has done little to convince international organizations. The asset’s status as a legal tender, which was passed into law in September 2021, in the country might soon change. A Financial Times report mentioned that the country is looking to secure a $1.3 billion loan from the International Monetary Fund (IMF), with one of its clauses threatening Bitcoin’s status in the country..The report revealed that the IMF is adding it as a condition for El Salvador to remove the mandatory legal tender status on Bitcoin. The organization wants businesses and individuals to decide if they want to accept the asset or not, making it optional. This means that the clause could hinder the country’s Bitcoin adoption clause.

However, experts have said that the effects may be considerably low because people have not been too open to accepting Bitcoin as legal tender. A survey in 2022 revealed that only a fraction of the businesses in El Salvador accept Bitcoin, with even a tinier fraction of individuals willing to use it as a means of payment. Still, the organization’s skepticism is not a surprise. The organization has always preached about the effects of using BTC as a legal tender, noting that its cons outweigh its pros.

The organization listed several negative factors, including its use for criminal activities, price volatility, and financial instability. However, the wide perception of the public about BTC has changed since then, with corporations adopting the asset. El Salvador’s bonds have also benefited, with their values increasing drastically. Despite that, the IMF has not stopped its continued probe into the country’s Bitcoin policy, asking for transparency.

Countries are leaning towards a Bitcoin reserve plan

With the rise in Bitcoin adoption among firms, there have been talks of countries creating their own Bitcoin reserve plans. In the United States, President-elect Donald Trump has promised to look into the creation of a Bitcoin reserve, with faithful urging him on and skeptics showing displeasure.

He spoke about it recently at the NYSE, where he said the United States needs to do something big with Bitcoin. Similarly, Florida and Pennsylvania have already submitted proposals for Bitcoin reserves, with states like Wisconsin and Michigan also showing keen interest. Other countries are also looking into the idea.

South Asian country Bhutan is one faithful supporter of the asset, boasting over $1 billion in Bitcoin holdings through mining contracts. Russia and Thailand are a few of the others considering the plan. Meanwhile, demand for Bitcoin exchange-traded funds (ETFs) is also on the rise, with institutional players steadily buying. Analysts have revealed that all these factors could see Bitcoin hit close to seven figures soon.

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Ukraine plans to legalize cryptocurrencies and introduce regulations that no longer provide tax exemptions by the first quarter of 2025. The proposed legislation, developed with the help of the National Bank and the International Monetary Fund, outlines a tax framework for cryptocurrencies similar to securities.

Ukraine has developed its crypto taxation rules in cooperation with the International Monetary Fund. Danylo Hetmantsev, head of the Finance, Tax and Customs Policy Committee of the Ukrainian Parliament, announced this at the Domestic Investment Opportunities Forum organized by Ekonomichna Pravda. He said that the draft law is being finalized by a relevant working group and aims to pass the law at the beginning of 2025.

Hetmantsev emphasized that Ukrainian crypto-transactions will not be tax-free. Instead, the tax framework will mirror that of securities, and profits will only be taxable when digital assets are converted to fiat money. Consultations with European experts and the International Monetary Fund influenced this decision.

The IMF is particularly actively involved in the development of crypto regulation in individual countries. It played a central role in shaping Salvador’s decision to revise its Bitcoin policy. As part of the terms of a $1.3 billion loan agreement, the IMF urged the country to end mandatory Bitcoin acceptance, citing financial stability concerns.

IMF representatives have consistently opposed the 2021 law making Bitcoin legal tender in El Salvador. Now, however, it appears that in exchange for billions of dollars in funding, the Central American country has submitted to the IMF’s demands.

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With Bitcoin ($BTC) still tracking around the $100,000 level, the world is preparing for the next huge stage of Bitcoin adoption. As massive institutions and sovereign countries climb aboard, the adoption curve is about to get a lot steeper.

El Salvador becomes more flexible to accommodate IMF

When one thinks of Bitcoin adoption on the sovereign level, El Salvador will normally spring to mind. The very first country to make Bitcoin legal tender, following the lead of its far-sighted President Nayib Bukele, El Salvador has ploughed a lonely furrow up till now, with dire warnings from the IMF as to what would happen with such a policy in place.

However, despite this, El Salvador’s adoption of Bitcoin has done wonders for the country, as its holdings have produced more than $300 million in profit thus far.

Nevertheless, the IMF is back again, and this time has obliged El Salvador to make some changes to its Bitcoin policy, one of the many strings attached to an IMF loan.

Thankfully, the strings in this respect are not too onerous, and among other things they require El Salvador to change its Bitcoin law so that not all businesses are obliged to accept Bitcoin for payments. Another requirement is that El Salvador increase its foreign reserves.

Besides accommodating the IMF for this important $1.3 billion loan, this should also facilitate loans from other major lenders such as the World Bank and the Inter-American Development Bank.

US and Russia among world powers looking at Bitcoin adoption

Other countries are on the verge of adopting Bitcoin in a big way, and these include some of the world’s preeminent economic powers. The US is in the throes of a complete turn around in its attitude to Bitcoin, with Donald Trump assuming the presidential mantle in January.

Besides filling his administration’s top jobs with mostly pro-bitcoiners, Trump has said that he wants to set up a U.S. Bitcoin strategic reserve. At the same time, various U.S. states are moving forward with plans for their own individual strategic Bitcoin reserves.

It’s not just the United States. A dialogue is taking place in Russian government circles as to the possibility of setting up a strategic Bitcoin reserve. 

On top of this, it must be wondered just how many other countries are also considering this, or have even started to mine or secretly buy Bitcoin, thus getting ahead in the potential Bitcoin buying arms race.

Bitcoin continues to respect uptrend

Source: TradingView

The short-term time frame for $BTC looks promising. A good level of support/resistance is developing at the $98,200 horizontal line. A recent breakout of a potential triangle has taken place, although it may well be that more price action could see another pattern emerge. The more time that price action can spend above this support level, the more likely it will be that this could be a base for the next upward thrust.

MACD continues bullish on 2-week chart

Source: TradingView

On the 2-week chart the fantastic progress that Bitcoin has made since breaking above the previous bull market top of $69,000 is totally evident. At the bottom of the chart, the MACD indicator, which gives buy and sell signals, is showing that it is very bullish. The blue line is above the orange signal line, with the jaws of these two lines wide open. Also, the dark green bars below are still being formed. The next bar is due to print at the end of this week. If it is a bigger, dark green bar, then expect buying to continue, and price to keep going up.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

With Bitcoin (BTC) hovering around the $100,000 level, the world prepares for the next major stage of Bitcoin adoption as large institutions and sovereign countries join the fold. El Salvador, the first country to make Bitcoin legal tender, has benefited significantly from its decision, generating over $300 million in profits.

However, the IMF has pressured the country to make changes to its Bitcoin policy, including allowing businesses the option not to accept Bitcoin for payments. Other powerful nations, such as the US and Russia, are also considering adopting Bitcoin on a large scale. The US is exploring the possibility of establishing a strategic Bitcoin reserve, and various states are planning individual Bitcoin reserves.

Russia is also considering setting up a strategic Bitcoin reserve, indicating that other countries may be doing the same. Technically, Bitcoin’s short-term outlook is promising, with a strong support/resistance level developing at the $98,200 horizontal line. A potential breakout from a triangle formation could occur, and continued time above this support level may indicate a base for the next upward move.

The MACD indicator on the 2-week chart remains bullish, with the blue line above the orange signal line and dark green bars forming below. The next bar to print at the end of the week will indicate the continuation of buying activity and price growth. Disclaimer: This article is for informational purposes only and should not be considered as legal, tax, investment, financial, or other advice.

Source

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According to Odaily, Ukraine is on track to legalize cryptocurrency by the first quarter of 2025, although it is unlikely to offer tax exemptions for crypto transactions. Danylo Hetmantsev, the head of Ukraine's Parliamentary Committee on Finance, Tax, and Customs Policy, stated that a parliamentary working group is finalizing the first reading of a draft law on cryptocurrency. He expressed confidence that the text, developed in collaboration with the National Bank and the International Monetary Fund (IMF), will be ready shortly after the New Year. The aim is to pass this legislation and legalize cryptocurrency by early 2025.

Hetmantsev further clarified that cryptocurrencies will not be exempt from taxes. The taxation model will mirror that of securities, with profits being taxed when assets are converted into currency. After consultations with European experts and the IMF, Ukraine has adopted a cautious approach towards tax exemptions for cryptocurrency use, as such exemptions could potentially exacerbate tax evasion in traditional markets. This careful stance reflects a broader concern about maintaining fiscal integrity while integrating digital currencies into the national economy.

Ukraine is moving closer to legalizing cryptocurrency, with a new bill expected to be finalized by the first quarter of 2025. 

Danylo Hetmantsev, head of the Ukrainian Parliament’s Committee on Finance, Tax, and Customs Policy, confirmed that the draft law is nearly ready for its first reading, according to Pravda. 

Hetmantsev stated that the law is being developed in collaboration with the National Bank of Ukraine and the International Monetary Fund

The proposed law will regulate cryptocurrency transactions and implement a taxation model similar to that of securities. Profits from crypto assets will be taxed when they are converted into traditional currency. Hetmantsev emphasized that Ukraine is adopting a cautious approach regarding tax exemptions for cryptocurrencies, citing concerns over potential tax evasion in traditional markets.

The government has avoided including tax exemptions in the draft to prevent misuse, with consultations involving European experts and the IMF helping shape the cautious stance.

Taxation on crypto transactions will mirror the tax treatment of securities, ensuring that profits are taxed only when assets are converted into fiat currencies.

You might also like: El Salvador and Bhutan: Betting on Bitcoin’s future | Opinion

Ukraine’s dance with crypto

This move toward crypto legalization in Ukraine follows its growing interest in digital assets. The country has previously adopted blockchain technology for some state functions. 

Ukraine received millions in crypto donations during the full-scale invasion that Russia started in Ukraine. The donations were used for various humanitarian and military purposes, showcasing the advantages of borderless and decentralized funds during a crisis. 

Back in late 2023, Ukraine implemented FATF crypto standards to meet international compliance and avoid the grey list.

While the legal framework for cryptocurrency in Ukraine is nearly complete, the first reading of the bill is expected to take place after the New Year.

You might also like: TURBO surges 30% following Coinbase listing

The post Ukraine All Set To Legalize Crypto In 2025 Without Tax Exemptions appeared first on Coinpedia Fintech News

In the latest development, Ukraine is poised to legalize cryptocurrency by the first quarter of 2025. However, while the country aims to regulate the industry, it is unlikely to offer tax exemptions for cryptocurrency transactions. 

Danylo Hetmantsev, the head of Ukraine’s Parliamentary Committee on Finance, Tax, and Customs Policy, noted that a parliamentary working group is finalizing the first reading of a draft law on cryptocurrency. He expressed confidence that the text, developed in collaboration with the National Bank and the International Monetary Fund (IMF), will be ready shortly after the New Year. They aim to pass this legislation and legalize cryptocurrency by early 2025.

Hetmantsev noted that there will be no tax exemptions for cryptocurrency. Taxation will follow the model used for securities, with profits taxed when assets are converted into currency.  

Hetmantsev explained that, after consulting with European experts and the IMF, they are taking a very cautious approach to using cryptocurrencies for tax exemptions, as this could potentially lead to tax evasion in traditional markets.

Notably, A draft law on the specifics of taxing virtual asset transactions was registered in Ukraine’s parliament in November 2023. The adoption of this document marks the final step toward the legalisation of cryptocurrencies in Ukraine.

Bitcoin’s price is still hovering around the $100,000 mark, with massive institutions and countries embracing the digital currency. This could lead to a steeper adoption curve. El Salvador, the first country to make Bitcoin legal tender, has benefited from its adoption. However, it had to make changes to its Bitcoin policy to receive a loan from the International Monetary Fund (IMF).

Other countries are also considering Bitcoin adoption, including the US and Russia. These countries may be planning to establish their own Bitcoin reserves, leading to a potential “Bitcoin buying arms race.”

Bitcoin’s short-term outlook appears promising, with support/resistance levels forming. The longer price action stays above the support level, the more likely it is to lead to the next upward move.

The 2-week chart shows that Bitcoin has made significant progress since breaking above its previous bull market top of $69,000. The MACD indicator suggests a bullish outlook, with the blue line above the orange signal line and wide “jaws.” However, more data is needed to confirm the trend’s continuation.

Disclaimer: The article is for informational purposes only and should not be used as legal, tax, investment, financial, or other advice.

Source

<p>The post Bitcoin Adoption on Global Scale: El Salvador’s Flexible Policy, US and Russian Interest first appeared on CoinBuzzFeed.</p>

BlockBeats news (December 12) reports that “Ukrainian Pravda” predicts cryptocurrencies will become legal in Ukraine by early 2025, but tax exemption is unlikely. Danylo Hetmantsev, Chairman of Ukraine’s Finance, Taxation, and Customs Policy Committee, stated: “The parliament’s working group is finalizing the first reading of a draft law on cryptocurrencies.

I anticipate that it will be formulated in collaboration with the National Bank and the International Monetary Fund (IMF). The draft will be ready after the new year. Our objective is to pass the legislation and legalize cryptocurrencies in the first quarter of 2025.” Hetmantsev added: “Cryptocurrencies will not be exempt from taxation; instead, they will be taxed similarly to securities, with profits subject to taxation when the assets are converted into currency.

After consulting with European experts and the IMF, we have adopted a cautious stance on granting tax exemptions to cryptocurrencies. This is to avoid escalating tax evasion in traditional markets.”

Source

<p>The post Ukraine to Legalize Cryptocurrencies but No Tax Relief Planned first appeared on CoinBuzzFeed.</p>

El Salvador is planning to revise its Bitcoin law to make accepting Bitcoin as a payment method voluntary instead of mandatory, addressing concerns raised by the IMF. The country aims to improve fiscal stability by reducing the budget deficit and enhancing regulations for Bitcoin use. By aligning with the IMF's recommendations, El Salvador could secure additional funding beyond the $1.3 billion loan. The country's initial adoption of Bitcoin as legal tender has faced challenges, including financial risks due to BTC's value fluctuations and lower-than-expected uptake. The request for an IMF loan is crucial for El Salvador to avert a fiscal crisis and maintain economic stability. The government is expected to implement structural reforms, including changes to the BTC law, to address IMF concerns while preserving the core of its BTC experiment. The outcome of negotiations with the IMF will shape El Salvador's economic future and serve as a case study for other nations considering crypto adoption. Read more AI-generated news on: https://app.chaingpt.org/news

El Salvador might implement changes to the law on Bitcoin to secure an agreement with the International Monetary Fund (IMF). The country could gain access to 3.3 billion dollars in loans if it makes the choice to accept BTC by Salvadoran merchants voluntary. 

El Salvador and the changes to the Bitcoin law to obtain loans from the IMF

From what has emerged, it seems that El Salvador might implement changes to its Bitcoin law to secure new loans from the International Monetary Fund (IMF).

Specifically, the country with BTC as legal tender since 2021, could make the choice to accept bitcoin as payment voluntary for Salvadoran merchants. 

A change of plan since, until now, the law on Bitcoin had forced the category to accept payments in BTC, just like it already does with the other legal fiat currency of the country, the US dollars. 

Now, however, things could change. In play, in fact, the IMF has prepared this clause of the new agreement, offering in return to El Salvador its access to a new loan program of 1.3 billion dollars. 

Not only that, but also Banca Mondiale e la Banca Interamericana di Sviluppo should lend an additional billion dollars each to the nation, for a total of 3.3 billion dollars.

The decision of El Salvador for the new agreement with the IMF will be revealed in the coming weeks. 

El Salvador: the decision to change the law on Bitcoin is worth 3.3 billion dollars

All things considered, therefore, the decision of El Salvador to change its law on Bitcoin as requested by the IMF, is worth exactly 3.3 billion dollars in loan. 

Yet, going back to 2021, El Salvador had shaken the entire world when it had granted BTC the same regulatory status as the nation’s official currency. 

Not only that, President Nayib Bukele has established a national Bitcoin fund, which, with BTC at almost $100,000, has reached a value of almost 600 million dollars.

In any case, recently, Bukele had stated that he was pleased with what has been achieved from 2021 to today with his strategy on Bitcoin, but that the adoption of BTC in the country is not yet as widespread as hoped. 

The recommendations of the IMF on BTC are softer 

Last October, the International Monetary Fund (FMI) had already recommended to El Salvador to narrow the scope of the Bitcoin law.

A renewal of something already anticipated in August 2024, even if with a softer approach from the agency. 

In fact, the IMF has always been opposed to El Salvador’s decision to legalize Bitcoin. In January 2022, the agency had urged El Salvador to remove the legal tender status for Bitcoin. Over the years, however, the IMF has begun to recognize the crypto asset.

In fact, in recent months, regarding BTC, the IMF had recommended that El Salvador should strive only to improve transparency and mitigate risks to fiscal and financial stability. 

El Salvador, the first country to adopt Bitcoin as legal tender, is reportedly considering revising its Bitcoin-related laws to secure a $1.3 billion loan from the International Monetary Fund (IMF). According to the Financial Times, negotiations between President Nayib Bukele and the IMF are expected to conclude within the next two to three weeks. Among the proposed changes is the removal of the mandatory acceptance of Bitcoin as a payment method for local businesses.

This potential shift represents a significant development in El Salvador’s Bitcoin experiment, raising questions about the future of cryptocurrency adoption in the country.

El Salvador’s Bitcoin Journey

Bitcoin Adoption as Legal Tender

In September 2021, El Salvador became the first country to declare Bitcoin as legal tender, alongside the U.S. dollar. The move was aimed at:

Boosting Financial Inclusion: Over 70% of the population lacked access to traditional banking services.

Reducing Remittance Costs: Bitcoin was expected to lower fees on remittances, a significant source of income for Salvadorans.

Challenges Since Adoption

Despite its innovative approach, El Salvador faced several challenges:

IMF Pushback: The IMF expressed concerns about Bitcoin’s volatility and its potential impact on the country’s financial stability.

Public Skepticism: Many Salvadorans were reluctant to adopt Bitcoin, citing technical difficulties and trust issues.

Market Volatility: Bitcoin’s fluctuating value caused uncertainty in national reserves and payment systems.

The IMF Loan Agreement: Key Details

Conditions for the Loan

To secure the $1.3 billion IMF loan, El Salvador must meet several conditions:

Revising Bitcoin Laws: One key requirement is the removal of the mandate for local businesses to accept Bitcoin as payment.

Strengthening Regulatory Framework: The IMF has urged El Salvador to improve its cryptocurrency regulations and better integrate traditional financial infrastructure.

Why the Loan is Crucial

El Salvador is seeking the loan to:

Stabilize the Economy: Address fiscal deficits and reduce debt levels.

Attract Investment: Secure funding for infrastructure and social programs.

Revising Bitcoin Laws: What It Means

Removing Mandatory Acceptance

Currently, El Salvadoran businesses are legally required to accept Bitcoin if offered by customers. Removing this mandate could:

Ease Business Concerns: Many small businesses lack the resources to manage Bitcoin payments.

Shift Adoption to Voluntary Basis: Allow businesses to choose whether to accept Bitcoin, reducing public resistance.

Balancing Crypto and Traditional Finance

The proposed revisions aim to strike a balance between:

Promoting cryptocurrency innovation.

Maintaining financial stability through traditional systems.

Implications for El Salvador

Economic Impact

IMF Support: Securing the loan will provide much-needed fiscal relief, enabling the government to address pressing economic challenges.

Public Perception: Changes to Bitcoin laws may improve public sentiment by addressing concerns about forced adoption.

Bitcoin’s Role in the Future

While revising laws may signal a shift in strategy, it does not necessarily mean abandoning Bitcoin:

Voluntary Adoption: Bitcoin could continue to play a role in remittances and digital payments without being mandatory.

National Reserves: The government may still hold Bitcoin as part of its national reserves.

Broader Implications for the Crypto Industry

A Cautionary Tale?

El Salvador’s experience highlights the complexities of adopting Bitcoin as legal tender:

Regulatory Challenges: Countries considering similar moves must prepare for potential pushback from international organizations like the IMF.

Market Volatility: Governments need to account for Bitcoin’s price fluctuations and their impact on public finances.

Positive Signals

Despite challenges, El Salvador’s experiment demonstrates:

The potential for cryptocurrencies to drive financial inclusion and reduce remittance costs.

The importance of balancing innovation with regulatory oversight.

Expert Opinions

Support for the Revisions

Financial experts suggest that revising Bitcoin laws could strengthen El Salvador’s position:

Improved Investor Confidence: Aligning with IMF recommendations may attract foreign investment.

Pragmatic Approach: Adjusting policies reflects a willingness to adapt to evolving economic conditions.

Concerns from Crypto Advocates

Cryptocurrency proponents have expressed reservations about scaling back Bitcoin adoption:

Missed Opportunities: Reducing Bitcoin’s role could hinder long-term innovation.

Global Perception: Changes may be seen as a retreat from the original vision of crypto integration.

Challenges Ahead

Navigating IMF Relations

Securing the loan requires navigating complex negotiations with the IMF:

Ensuring compliance with conditions without compromising national interests.

Addressing IMF concerns while maintaining a degree of crypto independence.

Managing Public Sentiment

El Salvador’s government must balance:

Addressing Public Concerns: Ensuring that policy changes reflect the needs of citizens.

Promoting Innovation: Preserving Bitcoin’s potential benefits for the economy.

Future Outlook

What’s Next for Bitcoin in El Salvador?

If the proposed revisions are implemented:

Voluntary Adoption: Bitcoin may transition to a voluntary payment option, allowing businesses and citizens to adopt it at their own pace.

Regulatory Framework: Improved regulations could enhance the integration of Bitcoin with traditional financial systems.

Lessons for Other Nations

El Salvador’s experience offers valuable insights for countries exploring cryptocurrency adoption:

The importance of regulatory clarity and public education.

The need to balance innovation with economic stability.

Conclusion

El Salvador’s potential revision of its Bitcoin laws to secure a $1.3 billion IMF loan marks a pivotal moment in its cryptocurrency journey. While the proposed changes may alter Bitcoin’s role in the economy, they reflect a pragmatic approach to balancing innovation with fiscal stability.

As the negotiations unfold, the world will watch closely to see how El Salvador navigates the challenges of integrating Bitcoin into its financial system. Regardless of the outcome, the country’s bold experiment continues to shape the global conversation around cryptocurrency adoption.

To learn more about the innovative startups shaping the future of the crypto industry, explore our article on latest news, where we delve into the most promising ventures and their potential to disrupt traditional industries.

A new report suggests that El Salvador is coming closer to striking an agreement with the International Monetary Fund (IMF) on multi-billion dollar funding — but it has to tweak some aspects of its contentious Bitcoin law in return.

El Salvador To Scale Back Its BTC Ambitions

According to a Dec. 9 report from the Financial Times citing people familiar with the matter, El Salvador expects to secure a $1.3 billion loan from the International Monetary Fund in the next two to three weeks.

In return, the Salvadoran government will stop forcing merchants to accept Bitcoin as payment, making it a voluntary payment method instead of compulsory.

If confirmed, the deal would unlock a total of $3.3 billion in loans from the World Bank and the Inter-American Development Bank, aimed at “supporting macroeconomic adjustment and structural reforms.”

El Salvador Has Been Buying Bitcoin Since 2021

El Salvador made history in 2021 when it became the first country in the world to adopt Bitcoin as a legal tender, forcing businesses to accept the cryptocurrency if they had the technological means to do so.

The impoverished Central American nation made its first 200 BTC buy on Sept. 6, 2021. The El Salvador government, led by its pro-Bitcoin president Nayib Bukele, has continued to purchase Bitcoin since, committing to acquire 1 BTC daily. The nation currently holds 5,932 BTC as of November 2024. With Bitcoin hitting $100,000 earlier this month, Bukele announced that the government’s Bitcoin stash was worth roughly $600 million, representing an impressive 126% increase.

The IMF, however, has condemned the approach and issued multiple warnings over the years, citing “a number of macroeconomic, financial, and legal issues.” The latest development comes as no surprise to some observers, as in October, the International Monetary Fund reiterated its recommendation to limit the scope of its Bitcoin legislation and adoption.

Nevertheless, the legal modification is unlikely to significantly impact Bitcoin adoption in El Salvador, which has been to a certain extent, poor. Back in August, Bukele admitted that the country’s BTC experiment had mixed results, adding that the crypto had witnessed limited domestic adoption.

Title: “El Salvador to drop mandatory Bitcoin payments for businesses; receives $1.3 billion loan from IMF”

El Salvador, the first country to adopt Bitcoin (BTC) as a legal tender in 2021, had faced strong criticism and pressure from the International Monetary Fund (IMF). The country had been trying to get a credit line from the IMF to solve its financial problems.

However, the IMF required changes to El Salvador’s Bitcoin bill. After a two-year negotiation deadlock, the country is now planning to remove the legal requirement for businesses to accept Bitcoin as a payment method. Instead, companies will be able to decide for themselves if they want to accept Bitcoin payments.

The agreement is expected to be reached within two to three weeks. In exchange, El Salvador will receive a $1.3 billion loan from the IMF. The loan will be accompanied by two others – a $1 billion loan from the World Bank and a $1 billion loan from the Inter-American Development Bank, totaling a possible $3.3 billion in loans for El Salvador.

In order to reach the agreement with the IMF, El Salvador will have to reduce its government deficit. The government plans to cut the budget deficit by 3.5% of GDP over the next three years through spending cuts and tax increases. It will also pass an anti-corruption bill and increase foreign exchange reserves from $11 billion to $15 billion.

The IMF has always been against the adoption of digital currencies in El Salvador, citing risks to financial stability and integrity. The IMF often calls on the government to stop accepting cryptocurrencies as legal tender. In October, the IMF recommended reducing Bitcoin-related policies and strengthening the regulatory framework for digital assets.

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El Salvador’s government may change part of its Bitcoin law to comply with an agreement reached with the International Monetary Fund (IMF). According to recent information from the Financial Times, merchants in El Salvador would no longer be required to accept bitcoin (BTC) as a national means of payment, and instead, accepting bitcoin could become voluntary.

This law change is among the conditions set by the IMF for El Salvador to gain access to a $1.3 billion loan program. The World Bank and the Inter-American Development Bank are anticipated to lend the nation an additional $1 billion each, for a total of $3.3 billion. The agreement is expected to be finalised within the next two to three weeks.

El Salvador has faced consistent pressure from global financial institutions for years. The nation made headlines in 2021 by declaring bitcoin as legal tender, giving the leading cryptocurrency equal regulatory status to the nation’s official currency, the US dollar. This move significantly impacted the traditional financial markets.

At the current bitcoin price of roughly $100,000, the country’s bitcoin holdings already amount to almost $600 million. Although the IMF has been critical of El Salvador’s approach to bitcoin, changing the law is unlikely to significantly impact the acceptance of bitcoin across the nation. Unfortunately, this acceptance has not yet reached its target levels.

A survey conducted by Central American University, Bukele’s alma mater, in January showed that 88% of Salvadorans surveyed did not use bitcoin in 2023. In addition to amendments to the Bitcoin Act, the Salvadoran government must also agree to reduce the budget deficit to 3.5% of GDP within three years through spending cuts and tax increases to comply with the IMF’s conditions.

Further requirements include increasing reserves and passing an anti-corruption law. In addition to the Bitcoin law, El Salvador’s National Commission for Digital Assets (CNAD) has developed a comprehensive regulatory framework for cryptocurrencies. The government has not yet released an official statement regarding the Financial Times’ report.

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El Salvador, the first country to adopt Bitcoin (BTC) as legal tender, is now considering canceling the requirement for companies to accept BTC payments in exchange for a $3.3 billion loan from the International Monetary Fund (IMF) and the World Bank. In 2021, the IMF had criticized the move, demanding that El Salvador amend its Bitcoin bill before providing financial assistance.

As a result, the IMF and El Salvador reached a deadlock for two years. In the new agreement, companies will have the option to accept or reject BTC payments, while the government plans to reduce its budget deficit and increase foreign exchange reserves. The IMF has consistently opposed the adoption of digital currencies in El Salvador, citing risks to financial stability and integrity.

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El Salvador, the first nation to adopt Bitcoin as legal tender, is preparing to scale back its cryptocurrency policies to secure a $1.3 billion loan agreement with the International Monetary Fund (IMF).

The country made it compulsory for businesses to accept Bitcoin as a payment method in 2021. 

El Salvador’s Bitcoin Policy to Shift Amid IMF Pressure

According to reports from the Finance Times, the deal is expected to be finalized in the coming weeks. It would reportedly remove the legal requirement for businesses to accept Bitcoin as payment, making it optional instead. 

This shift would significantly change the country’s Bitcoin law. El Salvador and its president Nayib Bukele consistently faced criticism from international financial institutions, including the IMF.

In addition to the IMF loan, the agreement could unlock $1 billion in financing from the World Bank and another $1 billion from the Inter-American Development Bank over the next few years.

“El Salvador found 50 million ounces of gold worth $131 billion at current prices and Bukele is absolutely going to rush to mine all that gold and sell it as fast as possible to buy BTC,” Travis Kling wrote on X (formarly Twitter).

As part of the loan conditions, the Salvadoran government has also agreed to implement broader fiscal reforms. These include reducing the budget deficit by 3.5% points of GDP over three years, introducing spending cuts and tax increases, and improving anti-corruption legislation. 

The country is also planning to raise financial reserves from $11 billion to $15 billion. Currently, El Salvador has approximately $556.7 million in BTC as a part of its reserve, sitting on 118% unrealized profits. 

El Salvador’s Bitcoin Purchases Since 2021. Source: Naib Tracker

Despite the IMF’s scrutiny, Bukele’s government has benefited significantly from its Bitcoin investment. Earlier this year, BTC’s all-time high helped the country buy back more debt and boost its economy. El Salvador is also planning to build a Bitcoin city funded by government-issued BTC bonds.Meanwhile, more countries are following El Salvador’s Bitcoin reserve strategy. As BeInCrypto reported earlier, Bhutan currently holds over $1 billion in BTC, becoming the fifth-largest government holder of the digital asset. 

Countries that Own Most Bitcoin. Source: Bitcoin Treasuries

The US is also likely to establish a national Bitcoin reserve under Donald Trump’s upcoming administration. Just last month, Pennsylvania already proposed a bill to dedicate state funding toward a Bitcoin reserve. 

El Salvador may roll back a small aspect of its Bitcoin law as part of a new deal with the International Monetary Fund.

The Latin American country may no longer require Salvadorean merchants to accept bitcoin (<a href="https://www.coindesk.com/price/bitcoin" target="_blank">BTC</a>) as a means of payment across the nation, instead making bitcoin acceptance voluntary, according to a <a href="https://www.ft.com/content/847cdb57-2d56-4259-ab8e-f95032efa259" target="_blank">new report</a> from the Financial Times.

The legal modification is part of the conditions imposed by the IMF for El Salvador to gain access to a $1.3 billion loan program, the report said. The World Bank and the Inter-American Development Bank are also expected to lend an extra $1 billion each to the nation, for a total of $3.3 billion. The agreement is projected to be reached within the next two or three weeks.

El Salvador shook the world when it made bitcoin legal tender in 2021, granting the top cryptocurrency the same regulatory status as the nation’s official currency, the U.S. dollar. At the same time the country’s president, Nayib Bukele, <a href="https://bitcoin.gob.sv/" target="_blank">has pursued</a> the establishment of a bitcoin Treasury, the holding of which has neared $600 million at bitcoin's current price of roughly $100,000. The IMF, however, has criticized the approach and issued various warnings over the years that El Salvador’s bitcoin strategy could imperil the nation’s financial stability.

The law change is unlikely to significantly impact bitcoin adoption across the country, which has been relatively poor. The Central American University, Bukele’s alma mater, found in January that 88% of surveyed Salvadorans hadn’t used Bitcoin in 2023.

Modifications to the bitcoin law aren’t the only condition imposed by the IMF. The Salvadoran government will also need to commit — via spending cuts and tax increases — to reducing its budget deficit to 3.5% of GDP over three years, the report said. Increased reserves and the passing of an anti-corruption law will also be necessary, according to the report.

Beyond the Bitcoin law, El Salvador’s National Commission of Digital Assets (CNAD) has <a href="https://www.coindesk.com/policy/2024/11/16/an-interview-with-el-salvadors-top-crypto-regulator-developing-countries-can-lead-the-financial-revolution" target="_blank">already developed</a> a comprehensive regulatory framework for crypto. At press time, the agency had not responded to a request for comment on the potential bitcoin law modification.