El Salvador’s Bitcoin experiment is facing major hurdles. The International Monetary Fund (IMF) is pushing the country to significantly curb its use of Bitcoin as a condition for a $1.4 billion loan.
Stricter Bitcoin Rules
The IMF’s demands are tough. El Salvador must:
- Stop buying Bitcoin with public money. No more government Bitcoin purchases.
- Shut down the Fidebitcoin trust fund by July 2025.
- End operations of the Chivo Bitcoin wallet.
- Publicly reveal all government Bitcoin wallet addresses.
- Provide audited financial statements for all crypto-related activities.
Why the IMF is Concerned
The IMF argues that Bitcoin’s volatility and limited use in El Salvador pose risks to the country’s economic stability. They say that while crypto could potentially make payments cheaper and faster, widespread adoption could destabilize the economy. Currently, Bitcoin’s role in El Salvador’s economy is minimal, and the US dollar remains the dominant currency.
El Salvador’s Response
While President Nayib Bukele has been a strong advocate for Bitcoin, the IMF report indicates El Salvador has agreed to stop government purchases of Bitcoin. The country also committed to avoiding overdue payments on government debts as part of broader efforts to improve its financial management.