Despite new IMF loan restrictions, El Salvador reaffirms its commitment to Bitcoin, announcing plans to accelerate acquisitions while maintaining educational and development initiatives.
El Salvador announced on Thursday its intention to continue its Bitcoin acquisition strategy, potentially at a faster rate, a day after securing a financing agreement with the International Monetary Fund (IMF). The announcement directly contrasts with the IMF’s recommendation to limit the country’s cryptocurrency exposure.
The director of the Bitcoin Office in El Salvador, Stacey Herbert, posted on her X page that Bitcoin remains legal tender in the country and that the government will continue acquiring the digital currency at a significant pace for its strategic reserve.
🇸🇻EL SALVADOR SECURES $3.5 FUNDING DEAL
➡️Bitcoin remains legal tender
➡️El Salvador will continue buying bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve
➡️Bitcoin capital markets will continue to be built; for example, the recent tokenized issuance…— Stacy Herbert 🇸🇻🚀 (@stacyherbert) December 19, 2024
El Salvador secured a $1.4 billion loan from the IMF on Wednesday, and as part of the deal, the country’s president, Nayib Bukele, agreed to adjust certain aspects of its Bitcoin policies.
The IMF hasn’t always supported El Salvador’s Bitcoin plans since President Nayib Bukele made Bitcoin legal money in September 2021. In 2022, the IMF warned that using Bitcoin as legal money was risky because its price changes a lot.
It was stated in the agreement released by the IMF that acceptance of Bitcoin by the private sector will only be voluntary, and taxes will only be paid in US dollars. In contrast, public sector engagement with Bitcoin will be restricted. The government’s role in the Chivo e-wallet to promote Bitcoin adoption will be gradually reduced.
“For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined. Taxes will only be paid in US dollars and the government’s participation in the crypto e-wallet (Chivo) will be gradually unwound.”according to the agreement.
El Salvador Stands Firm Despite Restrictions
However, despite the restrictions made in the agreement, the country remains undaunted in its Bitcoin policy. It currently holds nearly 6,000 bitcoins, valued at around $596 million. The director of the Bitcoin Office in El Salvador, Stacey Herbert, posted on her X page that Bitcoin remains legal tender in the country and that it will continue purchasing the digital currency at a very high pace for its strategic reserve.
Stacey further mentioned that efforts to develop the Bitcoin capital market will not stop, such as initiatives like the recent tokenized issuance of US Treasuries on Liquid through NexBridgeSV.
“Bitcoin capital markets will continue to be built; for example, the recent tokenized issuance of US Treasuries on Liquid via NexBridgeSV and so much more will be announced soon regarding capital markets on Bitcoin.” Stacey noted.
The head of trading and structured products for North America at Moneycorp, Eugene Epstein, commented on El Salvador’s announcement of buying more Bitcoin, suggesting it could be a response to negative reactions regarding the digital asset’s decreasing importance in the country. Eugene added that, given the size and terms of the IMF deal, it made sense for President Bukele to take this step.
Stacey further stated in her post that her office will continue developing Bitcoin policies and creating plans while attracting investors and building educational programs. One of the educational initiatives is the Little HODLer Bitcoin and Money Workbooks for Grades 2 and 3, set for January 2025. Additionally, CUBO+ will continue training top-tier Bitcoin and Lightning developers in the country, with another group of over 20 students graduating at the end of January 2025.
She also mentioned that Mi Primer Bitcoin and Node Nation will continue to be taught in high schools across El Salvador.
El Salvador is adjusting its Bitcoin policy to meet IMF conditions, including limiting government involvement in crypto services. The government-run Chivo wallet will either be sold or phased out, but private Bitcoin wallets will remain operational. Despite IMF restrictions, El Salvador remains committed to developing Bitcoin capital markets and educational initiatives.
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