The International Monetary Fund (IMF) is demanding changes to El Salvador’s Pro Bitcoin laws while hindering the country’s attempt to secure $1.4 billion in loans from the financial institution.
According to Bitcoin Magazine, El Salvador made history in 2021 when it adopted Bitcoin as a legal tender under President Nayib Bukele. The Country has since gone big on Bitcoin, Building Bitcoin reserves, Mining Bitcoin, and educating its citizens on Bitcoin.
However, the IMF has frowned on these Pro Bitcoin Activities while making changes to the Bitcoin law in the country a prerequisite to accessing a $1.4 billion loan the country badly needs to pay debts and obligations.
Talks on the loan deal have stalled for nearly two years as the IMF is determined to limit the scope of Bitcoin in the country.
According to the IMF’s communications director Julie Kozack last Thursday, the “risks” of Bitcoin remain a key issue in discussions with El Salvador. The IMF has previously cited financial integrity and stability concerns about Bitcoin.
The Fund’s opposition to El Salvador’s bitcoin laws exposes its position on the issue of cryptocurrency. While El Salvador sees it as an Innovative solution to financial inclusion, The IMF remains wary of its volatile, decentralized nature and its threat to IMF hegemony.
Irrespective of pressures, El Salvador has remained committed to its Bitcoin project sinking over $150 million into Bitcoin and also maintaining its target of buying 1 Bitcoin daily.
The IMF loan impasse puts El Salvador in a difficult situation because President Bukele is not prepared to yield to the harsh effect of the Fund’s soft power, creating an ideological tug-of-war situation.
El Salvador’s decision to go big on Bitcoin reflects the country’s choice toward decentralization and self-determination. The IMF demanding changes to its Bitcoin laws before it approves a loan derides the country’s sovereignty.
What to Know
- The Central American country of El Salvador became the first country in the world to accept Bitcoin as an official currency summarily investing state assets in the cryptocurrency.
- El Salvador holds roughly 2,380 bitcoins, purchased at an average price of $44,300, meaning the $105 million investment is now worth more than $155 million.
- Under El Salvador’s Bitcoin Law, every Salvadoran is eligible to receive $30 worth of free Bitcoin to incentivize its rollout. Citizens are also educated through government programs on Bitcoin and how cryptocurrencies work.
