The International Monetary Fund (IMF) has pointed out significant management issues regarding Bitcoin in El Salvador, which raises doubts about the country's ability to adhere to the terms of a previously approved $1.4 billion credit facility.
IMF's Compliance Concerns
According to the IMF, the government's Bitcoin holdings increased due to ineffective management of user deposits in the Chivo Wallet. This led to breaches in the non-accumulation targets, as the government failed to sell Bitcoin when users converted their assets into liquidity. These developments cast doubt on compliance with the credit agreement.
Plans to Enhance Bitcoin Oversight
The IMF report indicates that Salvadoran authorities are working to strengthen oversight of Bitcoin. The government has committed to increasing transparency in its operations by publishing quarterly financial statements for organizations such as Chivo Wallet. Strategies for privatizing Chivo Wallet are also being developed, with a business plan already in progress.
Legal Framework Reforms for Digital Assets
As part of its support, the IMF is assisting El Salvador in reforming its legal framework for digital assets, aligning it with international standards, particularly concerning asset custody and anti-money laundering laws. The government aims to adopt a single law on digital assets, which will strengthen the role of the Bitcoin Management Agency in overseeing cryptocurrencies.
Recent developments indicate ongoing challenges in Bitcoin management within El Salvador. Efforts to enhance transparency and oversight could put the country on the right path to meeting the conditions of its credit agreement with the IMF.
