IMF and El Salvador: 3 months after their agreement, what was the impact on the adoption of bitcoin in the country?

Does the agreement between El Salvador and the IMF upset the adoption of Bitcoin?

At the end of 2024, El Salvador and the International Monetary Fund (IMF) concluded an agreement allowing the Nayib Bukele government to benefit from a loan of $ 3.5 billion. In return, changes were made to “Bitcoin Ley”, adopted by the Legislative Assembly, a law which conferred on Bitcoin the status of legal currency in El Salvador in 2021.

These changes have been interpreted in different ways by the community: Some see it as the end of the legal status of bitcoin in the country, while others believe that these adjustments do not significantly affect the situation. Let us explore together the reality behind these developments.

To go further, discover our documentary on the adoption of Bitcoin in Salvador in full on Youtube.

The announcement was published on December 18, 2024, via a press release from the IMF entitled: “The IMF reaches an agreement with El Salvador on an extended financing mechanism”. This document explains the details of the agreement as well as the modifications made to the Bitcoin law.

The IMF specifies:

“The potential risks of the Bitcoin project will be considerably reduced in accordance with the policies of the fund […] Transparency, regulation and supervision of digital assets will be strengthened in order to protect financial stability, consumers, investors, as well as financial integrity. »»

In summary, several initiatives and articles of the Bitcoin law have been modified, in particular:

• Bitcoin purchases by the Salvadoral government are now ” boundaries “ ;
• The government must withdraw from the management of the Wallet Chivo ;
• Article 4, which allowed residents of Paying their bitcoin taxes is deleted ;
• Articles 7 and 12, which forced companies with technological means to Accepting Bitcoin payments are also repealed.

For many, these modifications have been translated the loss of the status of legal currency for bitcoin : Taxes can no longer be paid in BTC and companies are no longer forced to accept it. Others, on the other hand, believe that these changes do not affect this statusAnd consider that the IMF failed to impose a defeat in Bukele.

At the beginning of March, Nayib Bukele challenged the IMF by continuing Bitcoin's purchases, just hours after a new suspension request. The Salvadoral President has reaffirmed his commitment to the BTC, now his strategy despite international pressures and persistent criticism.

In November 2024, the Cryptoast team went to El Salvador to observe and experiment with the adoption of bitcoin in the country. This immersion gave birth to a documentary, now available on our YouTube channel:

https://www.youtube.com/watch?v=eelnuqs2i9c

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What does this agreement really change?

First of all, the IMF indicates that bitcoin purchases by the Salvadoral government are now “limited”. However, No specific details were communicated on the way in which El Salvador was limited in his purchases.

Since the conclusion of this agreement, Bitcoin Office, the government organization responsible for Bitcoin initiatives, continues to regularly announce the addition of one BTC per day to its wallets, or even more.

That said, it should be recalled that we have no certainty as to the exact methods of these purchases. It is quite possible that Bitcoins have been acquired and kept in a trusted third party several months earlier, and that only part of these funds be transferred to the public address at regular intervals.

Quantity of BTC added to the address of El Salvador

The withdrawal of the government of the management of the Chivo Wallet, required by the IMF, is largely perceived as good news.

Since their launch, the portfolio and distributors Chivo have been faced with many technical problems as well as in cases of identity theft allowing hackers to divert the 30 dollars in BTC offered to the Salvadorians.

Although these tools provide the population with simple access to the Bitcoin supported by the State, Their management by the government was more akin to a centralized bank, thus exposing users at a risk of arbitrary censorshipFrom the Bukele administration, to a real opportunity for monetary freedom. Such a situation is in contradiction with the fundamental principles of Bitcoin, which is based on decentralization and individual sovereignty.

Critics with regard to the Chivo Wallet had been formulated from the 1st day by bitcoiners. In this regard, The modifications obtained by the IMF meet the expectations of the Bitcoin community, while supporting the idea that the BTC must remain a tool allowing to separate currency from the control of the control from the control of the control of the state control.

To go further-how and why could France create a Bitcoins Strategic Reserve?

The deletion of articles 7 and 12, which obliged companies with technical means to accept Bitcoin payments, has only had little impact on the adoption of the BTC. In practice, although this obligation is registered in the law, no company was really worried about having refused these payments.

In addition, many major brands, including multinationals, already refused to accept Bitcoin before the modifications requested by the IMF.

Apart from the tourist areas of the El Salvador, where traders may lose opportunities if they do not accept BTC payments, adoption remains low. Indeed, the most popular points of sale receive only a handful of Bitcoin payments each week, gradually encouraging them to stop using it. Today, many of them now refuse the BTC, regardless of the requirements of the IMF.

Photo taken in a supermarket at El Salvador showing the boxes accepting Bitcoin payments

Finally, the deletion of article 4, which allowed the government to accept Bitcoin payments, did not there too than a limited impact. Given that few salvadorians use Bitcoin as a daily means of payment, It is reasonable to assume that BTC tax payments were also extremely rare.

For the few people directly concerned, such as those who work and are paid in Bitcoin or Bitcoiners expatriates, This modification adds only a simple step: converting their BTC into dollars to pay their taxes.

Being always recognized as a legal course by the government, Bitcoin benefits the El Salvador from an excellent exchange rate, and the capital gains made on the BTC are not imposed. Thus, this step remains relatively insignificant.

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What should we remember? Is Bitcoin still legal currency in El Salvador?

It is difficult to decide. The status of legal money of Bitcoin is now no longer fully respecteddue to the impossibility of paying your taxes in BTC and the lack of obligation for merchants to accept this currency.

That said, Bitcoin remains widely accessible, and many traders continue to accept BTC payments. These modifications could even promote more authentic adoption, based on everyone's free choice rather than a legal constraint.

Finally, educational programs, such as Mi Primer Bitcoin and Node Nation, continue in Salvadoral schools. These initiatives allow young generations to discover Bitcoin from their schooling, preparing them to make an informed choice on their integration into their daily lives once adults . This approach contributes to forming a population aware of Bitcoin, ready to adopt it according to their personal needs and convictions.

Discover our documentary on the adoption of Bitcoin in Salvador in full on YouTube.

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First attracted by the bait of gain, I am now trapped Deep the Rabbit Hole. Without a way out, I just have to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt A Block, an educational site dedicated to Bitcoin.

Marius Farashi Tasooji

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