El Salvador to Accelerate Bitcoin Purchases Following IMF Financing Deal
El Salvador announced its intention to accelerate its Bitcoin acquisition strategy following a financing agreement with the International Monetary Fund (IMF). This decision contrasts with the IMF's recommendation to limit cryptocurrency exposure.
The director of the Bitcoin Office in El Salvador, Stacey Herbert, confirmed on X that Bitcoin remains legal tender and the government will continue acquiring it for its strategic reserve.
🇸🇻EL SALVADOR SECURES $3.5 FUNDING DEAL
➡️Bitcoin remains legal tender
➡️El Salvador will continue buying bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve
➡️Bitcoin capital markets will continue to be built; for example, the recent tokenized issuance…— Stacy Herbert 🇸🇻🚀 (@stacyherbert) December 19, 2024
Financing Agreement Details
El Salvador secured a $1.4 billion loan from the IMF, with President Nayib Bukele agreeing to modify certain Bitcoin policies. The IMF has previously expressed concerns about Bitcoin’s volatility since its legalization in September 2021.
The IMF agreement stipulates that private sector acceptance of Bitcoin will be voluntary, taxes will only be paid in US dollars, and public sector engagement with Bitcoin will be limited. The government's involvement with the Chivo e-wallet will be gradually reduced.
“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 US dollars and the government’s participation in the crypto e-wallet (Chivo) will be gradually unwound.”
Continued Commitment to Bitcoin
Despite these restrictions, El Salvador holds nearly 6,000 bitcoins, valued at approximately $596 million. Stacey Herbert reiterated that Bitcoin will remain legal tender and that the country will continue purchasing the digital currency at a high rate.
Herbert also highlighted ongoing efforts to develop Bitcoin capital markets, including initiatives like the recent tokenized issuance of US Treasuries through NexBridgeSV.
“Bitcoin capital markets will continue to be built; for example, the recent tokenized issuance of US Treasuries on Liquid via NexBridgeSV and so much more will be announced soon regarding capital markets on Bitcoin.”
Educational Initiatives
Eugene Epstein from Moneycorp commented that El Salvador's plan to increase Bitcoin purchases may address negative perceptions regarding the asset's significance in the country. Herbert stated that her office will focus on developing Bitcoin policies, attracting investors, and implementing educational programs. Upcoming initiatives include the Little HODLer Bitcoin and Money Workbooks for Grades 2 and 3, set for January 2025, and continued training for Bitcoin developers through CUBO+.
Programs such as Mi Primer Bitcoin and Node Nation will remain part of the curriculum in high schools across El Salvador.
In summary, El Salvador is adapting its Bitcoin policy to align with IMF conditions while maintaining a commitment to Bitcoin acquisitions and educational efforts.