In a move to meet the requirements of a $1.4 billion loan agreement with the International Monetary Fund (IMF), El Salvador has made significant changes to its Bitcoin law. The country, which made headlines in 2021 as the first to adopt Bitcoin as legal tender, has now shifted its stance on Bitcoin payments for businesses. The change, which was passed by El Salvador’s Congress on January 29, 2025, removes the previous mandate that required businesses to accept Bitcoin. Instead, businesses now have the option to choose whether or not to accept the cryptocurrency.
Previously, under El Salvador’s Bitcoin law, businesses were legally obligated to accept Bitcoin alongside the U.S. dollar for transactions. This requirement was part of the government’s broader push to integrate Bitcoin into the economy as a means of financial inclusion and economic modernization. However, following pressure from the IMF, which voiced concerns about the financial risks posed by Bitcoin’s volatility, the country agreed to modify its approach.
The new legislation was passed quickly in the Legislative Assembly, with overwhelming support. Of the 57 votes cast, 55 were in favor, and only two were opposed. The move is part of El Salvador’s broader strategy to secure the IMF loan, which has been essential for the country’s economic stability. The IMF has been concerned that Bitcoin’s unpredictable price fluctuations could undermine the country’s financial system, and this adjustment is seen as a way for El Salvador to balance its ambitions in the crypto space while ensuring economic stability.
Despite scaling back the mandatory use of Bitcoin, El Salvador has not abandoned its commitment to the cryptocurrency. The government continues to view Bitcoin as a valuable asset for its financial strategy. In fact, just after the new law was passed, El Salvador made another significant Bitcoin purchase, adding 12 more Bitcoins to its national reserves. The country now holds a total of 6,022 BTC, valued at approximately $617 million.
El Salvador’s Bitcoin purchases have been made at an average price of $43,357 per Bitcoin, resulting in a 133% profit on the country’s investment. A spokesperson from the El Salvador Bitcoin Office stated that the government intends to continue its Bitcoin accumulation, with plans to increase efforts in 2025. The country sees Bitcoin as a way to boost financial inclusion, attract foreign investment, and demonstrate the potential of digital currencies in reshaping the global economy.
The IMF’s involvement in shaping El Salvador’s new Bitcoin regulations stems from concerns about the volatility of the cryptocurrency and its potential impact on the country’s economy. As part of the loan agreement, the IMF required El Salvador to reduce its direct involvement with Bitcoin. By making Bitcoin acceptance optional for businesses, El Salvador is complying with these terms while still maintaining its belief in the long-term potential of Bitcoin.
Bitcoin’s price volatility has raised concerns in the past, particularly among businesses and individuals who may not have the resources to manage risk. The change to the Bitcoin law allows businesses to have more flexibility and to decide whether Bitcoin is suitable for their operations.
El Salvador made history by becoming the first country to adopt Bitcoin as legal tender. Despite the challenges faced along the way, the government remains committed to the broader vision of using Bitcoin to increase financial inclusion for the unbanked population. With the new law, the government has signaled its willingness to adjust its approach to meet international financial standards while continuing to support Bitcoin as a tool for economic innovation.
The country has also explored the use of Bitcoin-backed bonds to attract foreign investment, further cementing its position as a leader in the global crypto movement. However, the shift in the law represents a balancing act between maintaining the country’s Bitcoin strategy and ensuring financial stability.
El Salvador’s decision to modify its Bitcoin law is a necessary step to comply with the IMF’s requirements while still holding onto its belief in the potential of Bitcoin. The government’s ongoing investment in Bitcoin signals that the country is committed to the long-term prospects of digital currency, even as it adapts to global financial pressures. As El Salvador navigates this new chapter, it will need to carefully balance Bitcoin adoption with financial stability to secure the benefits of both.
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