The IMF has approved a $1.4 billion facility for El Salvador, contingent upon modifications to its bitcoin policy aimed at addressing financial stability concerns. Key changes include voluntary acceptance of bitcoin, limits on public sector bitcoin accumulation, and regulations for government electronic wallets. Despite these measures, bitcoin remains legal tender in the country as El Salvador seeks a more cautious approach to cryptocurrency.
On March 3, 2025, the International Monetary Fund (IMF) sanctioned an extended facility of $1.4 billion for El Salvador to support its economic reform agenda. This approval came after El Salvador agreed to revise its bitcoin strategy to mitigate the IMF’s concerns regarding financial stability and consumer protection implications. Notably, the IMF also imposed restrictions on the accumulation of bitcoin within the nation.
In 2021, El Salvador, under the leadership of President Nayib Bukele, became the pioneering nation to designate bitcoin as legal tender. However, this initiative sparked apprehension among global financial institutions, especially the IMF, which expressed worries about the potential risks it posed to financial stability.
To comply with the IMF’s stipulations, El Salvador amended its bitcoin legislation in January 2025 as part of a financing accord. The IMF has subsequently introduced new requirements for the country, which include the following key measures:
1. Voluntary Acceptance of Bitcoin: Businesses will no longer be mandated to accept bitcoin, thereby respecting merchants’ preferences and addressing concerns regarding cryptocurrency’s volatility.
2. Reduction of Bitcoin in the Public Sector: The government will limit voluntary bitcoin accumulation and restrict any debt issuance or financial instruments associated with BTC to reduce state exposure to market fluctuations.
3. Regulation of Public Electronic Wallets: The government’s recognized digital wallet, Chivo, is to be either sold or abandoned to prioritize public resource allocation and foster private innovation in cryptocurrency-related financial services.
This agreement with the IMF is critical for enhancing investor confidence and ensuring stability within the country’s economy. Additionally, it opens the door for potential funding opportunities from other institutions, including the World Bank and the Inter-American Development Bank.
Despite these regulatory changes, bitcoin retains its legal tender status in El Salvador, with the government maintaining a belief in the potential of cryptocurrencies. The country is now aiming for a balanced approach that will allow it to capitalize on the advantages of BTC while addressing the risks included.
El Salvador’s engagement with the IMF highlights the complexities countries face when attempting to incorporate bitcoin and other cryptocurrencies into their financial systems. It remains to be observed whether the country will uphold these new regulations or choose to challenge the IMF’s directives, as it did in December 2024 when it purchased 1 million euros in BTC.
In summary, El Salvador’s recent agreement with the IMF marks a significant moment in balancing national cryptocurrency policy with international financial standards. The imposed regulations aim to enhance investor confidence and ensure economic stability while maintaining bitcoin’s recognition as legal tender. The future will reveal how the nation navigates these new constraints, which reflect broader challenges for countries integrating cryptocurrencies into their economic frameworks.
Original Source: www.cointribune.com
