The International Monetary Fund (IMF) has agreed to issue a $1.4 billion loan facility to the government of El Salvador, but there are some strings attached related to the Central American country’s Bitcoin (BTC) and crypto adoption policies.
The cash will support El Salvador’s reform agenda and is subject to approval from the IMF Executive Board, according to a new press release from the United Nations (UN) financial agency.
The IMF also says the facility is expected to “catalyze” a combined total of $3.5 billion in financing from the World Bank and various other international financial institutions.
The UN financial agency notes that El Salvador’s government agreed to limit its crypto efforts as part of the agreement.
“The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies. Legal reforms will make the acceptance of Bitcoin by the private sector voluntary. 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. Transparency, regulation, and supervision of digital assets will be enhanced to safeguard financial stability, consumer and investor protection, and financial integrity.”
However, Stacy Herbert, the director of El Salvador’s “Bitcoin Office,” says the country has no plans to slow down its Bitcoin purchases.
“Bitcoin remains legal tender. El Salvador will continue buying bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve.”
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Author: Conor Devitt
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