The International Monetary Fund (IMF) is halting El Salvador’s public sector’s Bitcoin purchases as part of the recently approved $1.4 billion loan deal. The fund highlighted its demands in an extended agreement under the Extended Fund Facility for El Salvador, which included a statement from the IMF Executive Director for El Salvador and a staff report. The country agreed to pause any voluntary BTC accumulation by the public sector in a technical memorandum of understanding. The memorandum of understanding outlined that voluntary BTC accumulation would include purchases and mining of the coin. The agreement also indicated that BTC acquired from forfeiture, seizing, custody, apprehension, and similar forms of government action against individuals or companies under the country’s law did not fall under the category. The memorandum of understanding further pointed out that the public sector included all hot and cold wallets under the governance of any government-owned entity. Some of the entities listed included the Chivo Wallet, La Agencia Administradora de Fondos Bitcoin, Comision Ejecutiva Hidroelectrica del Rio Lempa, and Oficina Nacional del Bitcoin. The IMF pushes for more actions to reduce Bitcoin risks The IMF suggested a reform in Bitcoin regulations in the country to reduce the risks associated with the coin, highlighting the necessity for mitigation steps despite the Bitcoin project’s mission to increase financial freedom in El Salvador. The agreement pointed out a recent reform enacted by the El Salvadoran government, which clarified BTC’s position as a legal tender. The reform eliminated the status of BTC as a legal tender by ensuring it was not mandatory for the private and public sectors to accept BTC transactions. The fund also stated that, as per the new reform, tax obligations in the country will only be paid in U.S. Dollars instead of BTC. The reform further ensured that other monetary obligations to the state would not be paid through BTC. The El Salvadoran government has also paused its provision of a BTC-USD convertibility mechanism. El Salvador’s President Nayib Bukele speaks during the inauguration of the Vijosa pharmaceutical plant in Santa Tecla, El Salvador November 20, 2023. REUTERS/Jose Cabezas El Salvador will also increase transparency across its BTC-related activity, including revealing statements related to the Chivo Wallet and the Fidebitcoin Trust. The government will also reveal all Bitcoin addresses for cold wallets under the control of public sector entities. The IMF also asked the El Salvadoran government to share plans on how the public sector would stop utilizing public funds in Chivo by the end of July this year. The wallet will then have the opportunity to be operated privately. The government further promised to liquidate the funds held in the Fidebitcoin Trust alongside the release of the Court of Accounts audits for the trust and store the funds in the BCR for safekeeping. El Salvador also assured the IMF of the creation of a management framework for BTC and other crypto assets owned by the government. The framework would enable the government to maintain accountability, transparency, and governance of all crypto assets in the country’s public sector. The IMF mandated the El Salvadoran government to increase its general oversight over crypto assets to match international standards. The fund suggested that a solid crypto framework and a regulator focused on virtual assets would boost the country’s viability as a crypto destination. The IMF advised that the framework should not hinder innovation in the sector. El Salvador purchases 5 BTC despite IMF deal 🔺 As part of an expanded $1.4 billion financing agreement, the International Monetary Fund ( #IMF ) is set to tighten restrictions on El Salvador's #Bitcoin purchases. Meanwhile, El Salvador has purchased 5 more Bitcoins, increasing its total balance to 6100 $BTC . pic.twitter.com/2vnj4OCQVm — PRO BLOCKCHAIN (@PRO_BLOCKCHAIN) March 4, 2025 The El Salvadoran government has still proceeded to purchase BTC despite the agreement it made with the IMF. The government bought 5 BTC today after the coin dropped to around $83,000, bringing the country’s current BTC holdings to 6,100 BTC. The coin, which has dropped by about 10% in the past 24 hours, is currently trading at $81,860. The purchases began in 2022 when President Nayib Bukele promised to buy 1 BTC a day. President Bukele also mentioned in December that the country would proceed with BTC purchases despite the IMF discouraging the idea. The country’s national bitcoin office director, Stacy Herbert, stated that El Salvador would maintain BTC as a legal tender while proceeding with its purchases to add to its strategic BTC reserve. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
