El Salvador, recognized as a pioneer in Bitcoin adoption, is at a pivotal moment following a recent agreement with the International Monetary Fund (IMF). The Salvadoran Congress swiftly approved legislation to adhere to the terms of this agreement, prompting questions about the future of Bitcoin in the country.
Congress Amends Bitcoin Laws Following IMF Agreement
On January 29, news emerged from Reuters confirming that a bill modifying existing Bitcoin legislation in El Salvador had been ratified. The new directive was initiated by President Nayib Bukele in response to the deal struck with the IMF.
Originally agreed upon in December, this agreement involves a loan of $1.4 billion for El Salvador from the IMF. However, as part of the conditions, the nation is required to decrease its involvement with Bitcoin. Notably, businesses will no longer be mandated to accept Bitcoin as a payment method, and the government will discontinue its support for the development of the Chavo wallet.
The bill was approved with a significant majority—55 votes in favor and just 2 against—marking a major shift from the prior requirement for businesses to accept Bitcoin. According to Elisa Rosales, a legislator from the ruling party, this amendment is essential to ensure the sustainability of Bitcoin as legal tender and facilitate its practical implementation.
This adjustment is aimed at ensuring compliance with the IMF to safeguard the agreed terms. Nevertheless, what may seem like a minor victory for the IMF could serve as a strategic maneuver for El Salvador.
El Salvador Holds Steady on Bitcoin Strategy
Despite the reduction of its Bitcoin strategy, the relationship between El Salvador and Bitcoin is far from over. Recently, the country added 12 Bitcoin to its reserves. A spokesperson from the Bitcoin Office stated that El Salvador intends to continue its Bitcoin purchases, with plans to ramp up acquisitions in 2025.
We have not only accomplished the largest rebranding in history, but we are now a real case study for a winning national strategy.
Currently, the nation’s reserves consist of 6,049 Bitcoin, valued at over $633 million at current rates, generating a profit of 127% from its investments, with an average purchase price of $46,000 per Bitcoin.
Notably, El Salvador was the first nation to adopt Bitcoin as legal tender. This decision faced criticism, particularly from U.S. Senator Bob Menendez, who was recently sentenced to 11 years in prison for accepting bribes. The FBI reported the discovery of over $480,000 in cash and $150,000 in gold at his residence.
As the landscape evolves, the United States, under former President Donald Trump, may consider establishing a reserve of Bitcoin and other cryptocurrencies, preparing for a potential supercycle in the crypto ecosystem. For instance, the memecoin Wall Street Pepe is attempting to unite smaller wallets to compete with market heavyweights.
Disclaimer: Cryptocurrencies are a high-risk asset class. This article is for informational purposes only and does not constitute investment advice. You could lose your entire capital.
Source: Reuters
Further Reading:
- El Salvador Strengthens BTC Reserves Despite IMF Threats
- Discovery of $3 Trillion in Gold in El Salvador: A Boon for Bitcoin?
- Breaking: Bukele and El Salvador Abandon Bitcoin for a $1 Billion Deal with the IMF?
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