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    El Salvador modifies Bitcoin policies in $1.4 billion IMF loan agreement

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    El Salvador has agreed to changes related to Bitcoin use in a $1.4 billion loan deal with the International Monetary Fund (IMF). Businesses no longer have to accept Bitcoin; its acceptance is now voluntary. The government also plans to step away from its less-used crypto wallet, Chivo. The IMF states this will lower the risks associated with Bitcoin. Despite the change, taxes will only be collected in dollars, making it the official currency. This agreement, pending approval, marks the end of negotiations over Bitcoin’s legal tender status in El Salvador, but its usage still continues to grow.

    Full Article

    El Salvador has made some changes related to Bitcoin as part of a $1.4 billion loan deal with the International Monetary Fund (IMF). A key change is that businesses in El Salvador are not required to accept Bitcoin as payment; it’s now voluntary. Also, the government will step back from its crypto wallet Chivo, which hasn’t been getting much use.

    The IMF is giving El Salvador $1.4 billion over the next three years and a bit. This helps El Salvador lower its debt-to-GDP ratio, a measure of how indebted a country is. The IMF mentioned that risks associated with Bitcoin will decrease greatly due to these changes.

    As for government interactions with Bitcoin, the IMF said any involvement would be limited. It’s noteworthy that El Salvador began buying Bitcoin in 2021 and currently owns almost 6,000 Bitcoins, worth around $602 million.

    The IMF also mentioned that taxes will only be collected in US dollars, making it the official currency. And, any involvement in the Chivo crypto wallet will be carefully reduced over time.

    Before this agreement becomes official, it has to be approved by the IMF Executive Board. But, this signals the end of four years of negotiations and discussions about El Salvador adopting Bitcoin as a legal tender. This made them the first country in the world to do so. It’s worth noting that El Salvador’s adoption of Bitcoin as legal tender has been an ongoing concern for the IMF, citing potential risks due to Bitcoin’s volatility.

    This agreement will result in more loans from global banks, such as the World Bank. The total financial deal is over $3.5 billion. Despite this announcement, President Nayib Bukele’s Bitcoin adviser implied that the decision is not impactful and that Bitcoin usage in El Salvador is voluntary and continues to grow.

    However, a recent survey revealed that 92% of Salvadorans do not use Bitcoin for transactions, a slight increase since 2023.

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