El Salvador made headlines as the first country to adopt Bitcoin as legal tender in 2021. However, by 2025, it likely ceased its ambitions of increasing Bitcoin reserves, largely due to the influence of the International Monetary Fund (IMF).
The Influence of IMF on El Salvador's Decision
One primary reason for ceasing Bitcoin purchases in El Salvador was a preliminary agreement with the IMF. On December 18, 2024, the country reached an agreement with the IMF for a $1.4 billion loan. As part of the agreement, the IMF restricted Bitcoin investment policies. They announced a limitation on public sector involvement in Bitcoin-related activities. The latest BTC purchase was recorded on February 17, 2025, indicating a policy shift due to the IMF deal.
What Did El Salvador Gain from the Agreement?
The IMF agreement provides not only a loan but also measures to strengthen the country's economic stability. One focus is on increasing GDP and improving fiscal policy, with a target of increasing the primary budget balance by 3.5% of GDP over three years. El Salvador is also expected to enhance anti-corruption measures and implement stricter anti-money laundering and counter-financing of terrorism regulations.
Future of Bitcoin Investment in El Salvador
Despite a temporary halt in Bitcoin purchases, El Salvador still holds significant cryptocurrency reserves. This could lead to substantial profits in the future if Bitcoin prices rise. It is expected that the country will proceed more cautiously in its cryptocurrency policy, considering IMF pressures.
El Salvador's strategy regarding Bitcoin faces challenges, but the cryptocurrency experiment is far from over. Decisions made under the IMF agreement aim to support the country's economic stability.
