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El Salvador agrees to limit the use of Bitcoin in exchange for IMF financing
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The government of El Salvador reached an agreement with the International Monetary Fund (IMF) to limit activities related to Bitcoin in the country in exchange for a financing package. The program, structured through a Expanded Financing Lineprovides for a loan of US$1.4 billion to support economic reforms and resolve the country’s balance of payments needs over 40 months.
The total package, including expected contributions from the World Bank, the Inter-American Development Bank (IDB) and other regional banks, could exceed US$3.5 billionaccording to the IMF.
Since adopted Bitcoin as legal tender in June 2021El Salvador has become a global reference in the integration of cryptocurrencies into the financial system. However, the agreement with the IMF requires changes that aim to mitigate the risks associated with the project.
One of the main measures proposed is to make the voluntary private sector acceptance of Bitcoin. This measure, which contradicts article 7 of the Bitcoin Law of 2021which stipulates that all economic agents must accept cryptocurrency as a form of payment.
Bitcoin Policy Changes in El Salvador
For the public sector, activities related to Bitcoin, including purchases and transactions with cryptocurrency, will also have limitations. However, the IMF has not yet specified the new parameters. Furthermore, the agreement provides that citizens start paying taxes exclusively in US dollars.
The government should also gradually reduce its participation in Chivoa state digital wallet created to facilitate Bitcoin transactions.
The IMF highlighted that the plan includes measures to improve transparency, regulation and supervision of digital assets. The objective is to protect the financial stability and integrity of the system.
Among the program’s other objectives are fiscal policies to reduce public debt, increase budget transparency and strengthen the country’s financial reserves. The agreement has not yet been finalized. Final approval by the IMF Executive Board depends on the implementation of prior actions agreed by El Salvador.
In August of this year, the president Nayib Bukele admitted that the adoption of Bitcoin had mixed results, with low acceptance in the domestic market. Even so, the government accumulated around 5,968.77 BTCvalued at more than US$604 million.
According to the profile “The Bitcoin Office”, in a post shared by Bukele, El Salvador continues to accumulate 1 BTC per day, every day.
El Salvador agrees to limit the use of Bitcoin in exchange for IMF financing
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El Salvador agrees to limit the use of Bitcoin in exchange for IMF financing
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El Salvador agrees to limit the use of Bitcoin in exchange for IMF financing
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El Salvador agrees to limit the use of Bitcoin in exchange for IMF financing
