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El Salvador strikes IMF deal to make Bitcoin acceptance voluntary and reduce government involvement in projects.
As part of a $1.4 billion IMF loan deal, El Salvador will make Bitcoin acceptance voluntary, end its involvement with the little-used Chivo wallet, and limit public sector engagement in Bitcoin-related economic activities.
According to a statement from the International Monetary Fund on December 18, the Central American country will receive $1.4 billion over the next 40 months after agreeing to measures aimed at reducing its debt-to-GDP ratio.
“The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies. Legal reforms will make acceptance of Bitcoin by the private sector voluntary,” the IMF said.
“For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”
El Salvador and the IMF: Gradual Shift in Bitcoin Strategy
The IMF stated that taxes will be paid in the country’s official currency, the US dollar, and that government involvement in the state-backed Chivo crypto wallet will be “gradually unwound.”
El Salvador began purchasing Bitcoin in 2021, and according to the country’s National Bitcoin Office, it currently holds 5,968.8 Bitcoin, valued at approximately $602 million.
A spokesperson from the National Bitcoin Office stated that the country will continue to “accumulate Bitcoin.”
“We will keep buying one Bitcoin a day (likely even more in the future), and we will not sell any of our current holdings,” the spokesperson said, adding that the Bitcoin Office’s plans remain unchanged and Bitcoin continues to be the country’s main strategy.
The agreement still requires approval from the IMF Executive Board, but it marks the end of four years of negotiations, including El Salvador’s decision in June 2021 to adopt Bitcoin as legal tender, making it the first country in the world to do so.
The IMF has long urged President Bukele to abandon his Bitcoin plans, arguing that the speculative nature of the cryptocurrency could put the country at risk.
The agreement will also secure additional loans from other global banks, including the World Bank, providing a total financing package of over $3.5 billion.
In response to the IMF’s statement, Bukele’s Bitcoin adviser, Max Keiser, expressed his disdain on X, stating, “Nobody pays attention to these idiots,” and called the agreement “bureaucratic, meaningless nonsense.”
In another post on X, Keiser added, “Bitcoin usage in El Salvador has always been voluntary, and its usage has never been higher and continues to grow. The IMF’s point is invalid.”
However, an October survey found that 92% of Salvadorans do not engage in Bitcoin transactions, up from 88% in a 2023 survey.
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