El Salvador has amended its Bitcoin regulations as part of a deal with the International Monetary Fund (IMF), securing a $1.4 billion loan to support its economic recovery.
In a swift move, El Salvador’s Congress approved the reforms shortly after receiving them from President Nayib Bukele. The adjustments align the country’s Bitcoin policies with the conditions laid out in the IMF agreement.
Once excluded from traditional financial markets due to its high debt and controversial Bitcoin policies, El Salvador faced rising bond yields and limited access to capital. As a result, the IMF deal became essential to stabilize the country’s economy and continue its ambitious overhaul.
The amended legislation retains Bitcoin as legal tender but introduces significant changes. Businesses are no longer required to accept Bitcoin for payments, making it voluntary. The reforms also restrict tax payments to U.S. dollars and signal a reduction in government-backed cryptocurrency initiatives, including the state-supported Chivo wallet. Despite these shifts, Bitcoin will remain a legal tender in the country, with the government continuing to accumulate Bitcoin as part of its reserve strategy.
Lawmakers, including Elisa Rosales of the ruling party, emphasized that the changes were necessary to ensure Bitcoin’s “permanence as legal tender” while also improving its “practical implementation.” The amendment passed with 55 votes in favor.
Bitcoin Accumulation Accelerates Post-IMF Deal
In the wake of the IMF deal, El Salvador has doubled down on its Bitcoin strategy, increasing its Bitcoin purchases. After signing the loan agreement, the country departed from its previous “1 Bitcoin per day” buying strategy, acquiring 11 BTC worth over $1 million. The National Bitcoin Office also confirmed the purchase of an additional 12 BTC on January 21, signaling an “accelerated pace” of accumulation.
As of now, El Salvador holds 6,049 BTC, valued at approximately $633 million, with an unrealized profit of 127%, according to the National Bitcoin Office.
Bitcoin-Friendly Initiatives Continue
Since becoming the first country to adopt Bitcoin as legal tender in September 2021, El Salvador has launched several initiatives to integrate cryptocurrency into its economy. These include the installation of more than 200 Bitcoin ATMs, making it one of the most Bitcoin-friendly countries for transactions.
The government has also initiated innovative projects such as Volcano Energy, a Bitcoin mining venture that uses renewable volcanic energy, and Volcano Bonds, a Bitcoin-backed bond offering designed to fund infrastructure projects and the development of Bitcoin City—an envisioned tax-free crypto hub powered by geothermal energy.
In a significant development, Tether Group, a leading crypto industry player, announced it would relocate its entire operations to El Salvador after securing a Digital Asset Service Provider license through its Seychelles-based affiliate, Bitfinex Derivatives. This move follows the issuance of the license on January 13.
Despite the adjustments to its Bitcoin policies, El Salvador’s commitment to Bitcoin remains strong, positioning the country as a key player in the global crypto landscape.