The International Monetary Fund (IMF) has set conditions for a $1.4 billion loan to El Salvador, requiring the country to halt Bitcoin accumulation and avoid issuing crypto-backed debt.
IMF's Bitcoin Restrictions
A new IMF policy document outlines restrictions on Bitcoin purchases by government entities. It prohibits voluntary Bitcoin acquisition or mining by public sector bodies, including state-controlled wallets like Chivo and agencies such as the 'Bitcoin Administration Agency'. Bitcoin obtained through law enforcement seizures is exempt from these restrictions.
Market Reactions
The IMF has voiced concerns about El Salvador's BTC approach, fearing that Bitcoin-backed debt could destabilize markets and elevate debt risks. Plans for 'volcano bonds' intended to fund infrastructure are now precarious under IMF conditions.
Mexican Billionaire and BTC
Mexican billionaire Ricardo Salinas has allocated 70% of his investment portfolio to Bitcoin, underscoring his belief in its potential. An avid BTC advocate, Salinas views cryptocurrency as a hedge against inflation and state financial controls.
IMF stipulations could compel El Salvador to adjust its Bitcoin strategy considerably. While investors like Ricardo Salinas remain bullish on cryptocurrency, El Salvador's government may need to alter plans in pursuit of financial backing.
