USD
Nation Boosts Bitcoin Reserve Despite IMF Restrictions
El Salvador purchased 11 Bitcoin, worth approximately $1 million, just one day after securing a $1.4 billion loan agreement with the International Monetary Fund (IMF). The deal, designed to alleviate the country’s financial challenges, came with clear stipulations aimed at reducing the government’s involvement in Bitcoin-related activities. This latest acquisition marks a departure from the country’s previous “one Bitcoin per day” purchase strategy, which began under President Nayib Bukele’s directive in November 2022.
The country’s National Bitcoin Office announced the purchase on December 19 via an X post, stating that the transaction bolstered El Salvador’s Strategic Bitcoin Reserve. The purchase brought the total Bitcoin holdings to 5,980.77 BTC, currently valued at around $580 million with Bitcoin trading at approximately $97,000. Stacy Herbert, Director of the National Bitcoin Office, suggested that the country might accelerate its Bitcoin acquisitions, emphasizing that Bitcoin remains central to El Salvador’s long-term economic vision.
The IMF deal, finalized on December 18, requires El Salvador to reduce its government-led Bitcoin activities, including restricting state involvement in transactions, purchases, and management of the Chivo crypto wallet. Furthermore, the agreement mandates that Bitcoin acceptance by the private sector remains voluntary, and tax payments must exclusively be made in U.S. dollars. These conditions represent a significant compromise for a government that made headlines in September 2021 as the first nation to adopt Bitcoin as legal tender.
Despite these constraints, Herbert affirmed that Bitcoin’s legal status in El Salvador would remain unchanged. She acknowledged the government’s plan to either sell or phase out its Chivo wallet while expressing confidence that private Bitcoin wallets would continue to thrive in the country. A spokesperson for the Bitcoin Office reinforced this stance, stating that El Salvador’s daily Bitcoin purchases would likely increase and that the nation has no intention of selling its existing holdings.
The IMF Executive Board has yet to approve the agreement, signaling a potential conclusion to four years of tense negotiations. The IMF has consistently criticized Bukele’s Bitcoin-centric policies, citing potential economic risks. While the loan offers much-needed financial relief, the compromise illustrates the delicate balance El Salvador must strike between maintaining its Bitcoin ambitions and adhering to international financial expectations.
This article has been refined and enhanced by ChatGPT.
