El Salvador, renowned as the first nation to adopt Bitcoin as legal tender, is reportedly reevaluating its Bitcoin-focused policies under growing pressure from the International Monetary Fund (IMF).
Negotiations between El Salvador and the IMF are centered on a $1.3 billion loan agreement, with conditions potentially requiring significant modifications to the country’s Bitcoin Law, according to a Dec. 9 report from the Financial Times. Sources familiar with the discussions revealed that the agreement, if finalized, would eliminate the mandate for businesses to accept Bitcoin as payment, making its usage optional rather than compulsory.
This agreement is anticipated to be finalized within the next two to three weeks. Once approved, it could also pave the way for additional financial aid, including $1 billion in lending from the World Bank and another $1 billion from the Inter-American Development Bank in the coming years.
The IMF has consistently opposed El Salvador’s pioneering adoption of Bitcoin as legal tender, raising concerns about potential risks to the country’s financial stability. Since the landmark decision in September 2021, the IMF has issued multiple warnings to Salvadoran officials, including President Nayib Bukele, regarding the possible economic and fiscal implications of embracing cryptocurrency at a national level.
Negotiations regarding the $1.3 billion loan have been ongoing since at least October, with discussions centering around potential adjustments to the Bitcoin Law. This step marks a notable shift in El Salvador’s approach, highlighting the challenges of balancing cryptocurrency innovation with traditional financial systems and international expectations.
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Author: Sb
