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Update Dec. 19, 5:45 am UTC: This article has been updated to add a response from El Salvador’s National Bitcoin Office.
El Salvador is set to make merchant acceptance of Bitcoin voluntary, unwind its involvement in its little-used Chivo wallet and make public sector engagement of Bitcoin-related economic activity “confined” as part of a $1.4 billion loan deal with the International Monetary Fund.
The Central American nation will get $1.4 billion from the IMF over the next 40 months after agreeing to measures aimed at dropping its debt-to-GDP ratio, the global lender said in a Dec. 18 statement.
“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.”
IMF also said taxes will be paid in US dollars — the country’s official currency — and government involvement in the state-backed crypto wallet Chivo “will be gradually unwound.”
El Salvador began buying Bitcoin in 2021 with the country’s National Bitcoin Office’s tracker showing it currently holds 5,968.8 Bitcoin, worth about $602 million.
A National Bitcoin Office spokesperson told Cointelegraph that the country “will keep accumulating 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,” said the spokesperson, who added: “The plans for the Bitcoin Office remain the same as Bitcoin continues to be our main strategy.”
The agreement still needs the IMF Executive Board’s approval, but it marks the end of four years of negotiations that featured President Nayib Bukele’s adoption of Bitcoin (BTC) as a legal tender in June 2021 — making it the first country in the world to do so.
Source: IMF
The IMF has long called on Bukele to drop its Bitcoin plans, saying the speculative nature of the cryptocurrency could put the country at risk.
The agreement will also see additional loans from other global banks, including the World Bank, for a total financing deal of over $3.5 billion.
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In reaction to the IMF’s announcement, Bukele’s Bitcoin adviser Max Keiser said on X of the IMF that “nobody pays attention to these assh****” and called the agreement “bureaucratic, meaningless, nonsense.”
“Bitcoin use in El Salvador was always voluntary and its usage has never been higher and continues to grow,” Keiser said in another X post. “The IMF’s point is DOA [dead on arrival].”
However, an October survey of Salvadorans found that 92% don’t make transactions using Bitcoin, an increase from a 2023 survey that found 88% didn’t use Bitcoin for transactions.
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