The Central American country secures a $1.4 billion loan in exchange for revisions to the Bitcoin Law.
The government of El Salvador has reached an agreement with the International Monetary Fund (IMF) to obtain $1.4 billion in financing over the next 40 months, in exchange for amendments to the Bitcoin Law.
Among the main changes, the acceptance of Bitcoin by merchants will become voluntary, no longer mandatory as stipulated by Article 7 in 2021 when El Salvador became the first country in the world to adopt the cryptocurrency as legal tender. However, while the law formally required the acceptance of Bitcoin as legal tender, this provision was never fully enforced in practice.
The government will also scale back its involvement with the state wallet, Chivo, and limit public sector economic activities related to Bitcoin.
According to the agreement, taxes will now be payable exclusively in US dollars, which remains the country’s official currency. Despite these concessions, the National Bitcoin Office has confirmed its commitment to continue accumulating the cryptocurrency, maintaining its current holdings of 5,968.8 bitcoins (approximately $602 million).
The agreement, which still requires approval from the IMF Executive Board, marks the conclusion of four years of negotiations complicated by President Nayib Bukele’s decision to adopt Bitcoin. The IMF has consistently raised concerns over the risks associated with the speculative nature of the asset.
The deal also paves the way for additional loans from other international banks, bringing the total financing package to over $3.5 billion.
