IMF Steps Up Pressure on El Salvador Over Bitcoin Investments

El Salvador and the IMF reached an agreement late last year that would limit government activity in the cryptocurrency sector. In exchange, the country received access to a $1.4 billion credit line for 40 months. In addition, the World Bank and other international organizations can add about $2.1 billion to this amount, increasing the total funding to $3.5 billion.

El Salvador immediately began to implement the terms of the deal. In particular, the country's parliament approved amendments to the Bitcoin Law, as a result of which in February of this year the cryptocurrency lost its status as a legal tender. This means that now it is impossible to pay taxes with Bitcoin, and its use in commerce has become voluntary. Recall that the digital currency received official status in El Salvador back in September 2021.

According to the IMF, the presence of Bitcoin in the country's financial system is associated with high risks, especially in the context of macroeconomic vulnerability. The organization insists on limiting crypto investments as an important part of the anti-crisis program.

However, President Nayib Bukele does not intend to curtail the course towards the digital economy. He stressed that despite criticism from the international community, El Salvador will continue to accumulate Bitcoins. Moreover, last week Bukele reported that unrealized profits from government investments in Bitcoin had reached $357 million. At the same time, he reposted the IMF statement without commenting on its call to limit investments in cryptocurrency, which caused a mixed reaction from the public and experts.

In response to the new IMF demands, the National Bitcoin Office of El Salvador (ONBTC) announced the purchase of an additional 8 BTC, bringing the total volume of government reserves to 6,190.18 BTC.

Judging by the current dynamics, the confrontation between the IMF and El Salvador on the Bitcoin issue will only escalate.