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El Salvador to Change Bitcoin Payment Law for $1.3 Billion IMF Loan

El Salvador to Change Bitcoin Payment Law for $1.3 Billion IMF Loan

Be In Cryptoby Be In Crypto
9 December 2024
El Salvador, the first nation to adopt Bitcoin as legal tender, is preparing to scale back its cryptocurrency policies to secure a $1.3 billion loan agreement with the International Monetary Fund (IMF). The country made it compulsory for businesses to accept Bitcoin as a payment method in 2021.  El Salvador’s Bitcoin Policy to Shift Amid IMF Pressure According to…

El Salvador, the first nation to adopt Bitcoin as legal tender, is preparing to scale back its cryptocurrency policies to secure a $1.3 billion loan agreement with the International Monetary Fund (IMF).

The country made it compulsory for businesses to accept Bitcoin as a payment method in 2021. 

El Salvador’s Bitcoin Policy to Shift Amid IMF Pressure

According to reports from the Finance Times, the deal is expected to be finalized in the coming weeks. It would reportedly remove the legal requirement for businesses to accept Bitcoin as payment, making it optional instead. 

This shift would significantly change the country’s Bitcoin law. El Salvador and its president Nayib Bukele consistently faced criticism from international financial institutions, including the IMF.

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In addition to the IMF loan, the agreement could unlock $1 billion in financing from the World Bank and another $1 billion from the Inter-American Development Bank over the next few years.

“El Salvador found 50 million ounces of gold worth $131 billion at current prices and Bukele is absolutely going to rush to mine all that gold and sell it as fast as possible to buy BTC,” Travis Kling wrote on X (formarly Twitter).

As part of the loan conditions, the Salvadoran government has also agreed to implement broader fiscal reforms. These include reducing the budget deficit by 3.5% points of GDP over three years, introducing spending cuts and tax increases, and improving anti-corruption legislation. 

The country is also planning to raise financial reserves from $11 billion to $15 billion. Currently, El Salvador has approximately $556.7 million in BTC as a part of its reserve, sitting on 118% unrealized profits. 

el salvador's bitcoin purchases
El Salvador’s Bitcoin Purchases Since 2021. Source: Naib Tracker

Despite the IMF’s scrutiny, Bukele’s government has benefited significantly from its Bitcoin investment. Earlier this year, BTC’s all-time high helped the country buy back more debt and boost its economy. El Salvador is also planning to build a Bitcoin city funded by government-issued BTC bonds.

Meanwhile, more countries are following El Salvador’s Bitcoin reserve strategy. As BeInCrypto reported earlier, Bhutan currently holds over $1 billion in BTC, becoming the fifth-largest government holder of the digital asset. 

countries that own most Bitcoin
Countries that Own Most Bitcoin. Source: Bitcoin Treasuries

The US is also likely to establish a national Bitcoin reserve under Donald Trump’s upcoming administration. Just last month, Pennsylvania already proposed a bill to dedicate state funding toward a Bitcoin reserve. 

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Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Mohammad Shahid is an experienced crypto journalist with a specialization in blockchain security. He covers a wide range of topics spanning everything from Web3 to retail crypto. As an experienced freelance journalist, he has worked on campaigns for several tier-1 exchanges, such as Bitget, and startups, including RankFi and HAQQ. Mohammad comes from an extensive technical background, with a master’s degree in Cyber Security Analysis from Macquarie University, where he majored in…

Mohammad Shahid is an experienced crypto journalist with a specialization in blockchain security. He covers a wide range of topics spanning everything from Web3 to retail crypto. As an experienced freelance journalist, he has worked on campaigns for several tier-1 exchanges, such as Bitget, and startups, including RankFi and HAQQ. Mohammad comes from an extensive technical background, with a master’s degree in Cyber Security Analysis from Macquarie University, where he majored in…


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