✨ El Salvador and IMF Deal Imposes Bitcoin Activity Limitations
posted 3 hr ago
El Salvador and the International Monetary Fund (IMF) have reached an agreement on a $1.4 billion loan package to support the country’s reform agenda.
The deal between El Salvador and the IMF comes with limitations on Bitcoin-related activities for the Latin American country.
In particular, accepting Bitcoin in the private sector will be voluntary, and the public sector’s participation in Bitcoin-related activities will be limited.
El Salvador is known for its pro-Bitcoin policy and investments in the coin. In June 2021, President Nayib Bukele announced Bitcoin as a legal tender, making El Salvador the first country in the world to make that decision.
The country also invested in Bitcoin as part of its national treasury. With the recent Bitcoin price surge, the country’s Bitcoin holdings have grown to over $630 million, with a total profit increase of more than 130%.
The program outlines a 40-month plan under the Extended Fund Facility (EFF) to address the country’s balance of payments needs and economic growth. Overall, the financing package is expected to be $3.5 billion, with additional support from the World Bank, the Inter-American Development Bank, and other institutions.
The deal between El Salvador and the IMF comes with limitations on Bitcoin-related activities for the Latin American country.
In particular, accepting Bitcoin in the private sector will be voluntary, and the public sector’s participation in Bitcoin-related activities will be limited.
El Salvador and IMF deal imposes Bitcoin activity limitations. Source: imf.org
According to a press release published by the IMF, these limitations are needed to manage the risks associated with cryptocurrency.
Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined. Taxes will only be paid in U.S. dollars and the government’s participation in the crypto e-wallet (Chivo) will be gradually unwound.- IMF says.
The institution also mentioned collaborating with the Salvadoran authorities over the past months to develop the reform program. However, the initiative is still subject to approval by the IMF board by early February 2025.
El Salvador is known for its pro-Bitcoin policy and investments in the coin. In June 2021, President Nayib Bukele announced Bitcoin as a legal tender, making El Salvador the first country in the world to make that decision.
The country also invested in Bitcoin as part of its national treasury. With the recent Bitcoin price surge, the country’s Bitcoin holdings have grown to over $630 million, with a total profit increase of more than 130%.
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