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El Salvador: Tightening to Bitcoin after $1.4 billion deal with IMF
By Daniele Corno
IMF pushes El Salvador to reduce Bitcoin use in the country: no tax in BTC, abandoned Chivo wallet, and limits on government purchases
Agreement with IMF: Bitcoin under control
El Salvador has signed an agreement with the International Monetary Fund ( IMF) to receive a$1.4 billion loan .
In return, the country will have to reduce the use of Bitcoin in the public sector. Key measures include ending government purchases of Bitcoin, limited so far to one BTC per day, and abandoning the unsuccessful Chivo wallet. In addition, citizens will only be able to pay taxes in U.S. dollars, excluding BTC as an option.
The program will extend over 40 months and involves total support of$3.5 billion, thanks in part to funds from the World Bank and other financial institutions.
According to the IMF, the goal is to strengthen the country’s economic and fiscal stability. However, this choice raises many questions. Is it really a solution for economic stability or is it a pure political move?
Bitcoin in El Salvador: doubts and results
In 2021, El Salvador became the first country to make Bitcoin legal tender. President Nayib Bukele ‘s goal was to improvefinancial inclusion.
However, Bitcoin adoption did not reach initial expectations, complicated in part by the low popularity of the Chivo wallet, designed to simplify BTC payments.
Despite criticism, the country has accumulated 5,968 BTC, worth about $604million. Now, the IMF is pushing to better regulate the digital market and reduce the associated risks.
El Salvador keeps stacking 1 BTC per day, every day.
🇸🇻🏆🚀 pic.twitter.com/6gevIr1j4A
— The Bitcoin Office (@bitcoinofficesv) December 18, 2024
The agreement also aims to reduce public debt and improve fiscal transparency although, however, the program is not yet final. El Salvador will have to implement the required measures before final approval.
