El Salvador Scales Back Bitcoin Law to Secure $1.4 Billion IMF Deal

El Salvador’s Congress has approved significant changes to its Bitcoin law, marking a shift in the country’s cryptocurrency policy. The move comes as part of efforts to secure a $1.4 billion loan agreement with the International Monetary Fund (IMF).

The revised legislation, passed on January 29, 2025, removes the requirement for businesses to accept Bitcoin as payment. This adjustment represents a notable departure from the 2021 law that made Bitcoin legal tender in El Salvador.

Companies now have the option to accept cryptocurrency transactions. Despite these modifications, Bitcoin retains its status as legal tender in the country. El Salvador continues to hold Bitcoin in its national reserves, with 6,049 Bitcoin valued at approximately $633 million as of January 2025.

The changes align with IMF requirements, addressing concerns about the risks associated with widespread cryptocurrency adoption. The fund has consistently expressed reservations about El Salvador’s Bitcoin strategy.

The swift approval of the bill, with 55 votes in favor and two against, demonstrates the government’s commitment to securing international funding. Elisa Rosales, a ruling party lawmaker, stated that the changes aim to improve Bitcoin’s practical implementation.

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El Salvador’s Bitcoin experiment has faced challenges since its inception. A 2024 survey revealed low adoption rates, with only 8% of Salvadorans using Bitcoin for daily transactions. The government’s Chivo wallet app saw limited use despite initial incentives.

The IMF loan agreement extends beyond Bitcoin regulations, including measures to strengthen bank reserves and improve governance. These steps aim to boost El Salvador’s economic stability and attract further investment.

As El Salvador navigates this new phase, its experience may influence how other nations approach cryptocurrency adoption and regulation. The country’s journey continues to shape the intersection of traditional finance and digital assets, with potential implications for global economic policies and financial innovation.