El Salvador has agreed to amend its Bitcoin policies as part of a $1.4 billion deal with the International Monetary Fund, including voluntary acceptance of cryptocurrency and reducing state involvement with the Chivo wallet.
Details of the IMF Agreement
El Salvador has reached a 40-month agreement with the IMF aimed at improving the country's debt-to-GDP ratio. A key aspect of this agreement is the modification of Bitcoin-related policies.
Changes in Bitcoin Usage Policies
Under the new terms, the private sector will no longer be required to accept Bitcoin and public sector involvement in Bitcoin-related activities will be limited. This is intended to minimize risks associated with cryptocurrency. Taxes will be paid solely in U.S. dollars, El Salvador’s official currency, and the government will gradually reduce its involvement in the Chivo wallet, which has seen limited use.
Reactions and Consequences
This agreement marks the end of a lengthy negotiation process and requires approval by the IMF Executive Board. It paves the way for further financial support from global institutions. Despite the IMF's concerns about Bitcoin's speculative risks, President Nayib Bukele's Bitcoin advisor, Max Keiser, dismissed the IMF's stance as 'nonsense' and reaffirmed Bitcoin's voluntary use in El Salvador.
The deal with the IMF represents a significant step in El Salvador’s economic policy, aimed at balancing national interests and international obligations, and it may significantly impact the country's future relationship with Bitcoin.
