IMF Imposes New Bitcoin Rules on El Salvador Through $1.4 Billion Loan
Bukele’s Bitcoin Vision Faces IMF Scrutiny
El Salvador’s bold experiment with Bitcoin as legal tender is facing renewed scrutiny from the International Monetary Fund (IMF), which has imposed new restrictions and conditions on the country’s cryptocurrency policies as part of a $1.4 billion loan agreement. The deal, finalized this week, marks another chapter in the tense relationship between President Nayib Bukele’s pro-Bitcoin government and the traditional financial establishment.
While the IMF’s funding is seen as crucial for El Salvador’s economic stability and debt management, its new conditions raise concerns about whether the small Central American nation is being pressured to scale back its Bitcoin ambitions in exchange for financial relief.
IMF’s Bitcoin Conditions: What’s Changing?
The IMF has long been vocal about its concerns regarding El Salvador’s Bitcoin adoption, arguing that the decision to make it legal tender in 2021 introduced macroeconomic risks, financial instability, and regulatory uncertainty. As part of the new loan agreement, the IMF has reportedly demanded specific policy adjustments, including:
- Stronger Oversight of Bitcoin Transactions
- The Salvadoran government must tighten financial monitoring and reporting of Bitcoin transactions, especially in relation to anti-money laundering (AML) and counter-terrorism financing (CFT) laws.
- The IMF is insisting on full compliance with international financial transparency standards.
- Limitations on Government Bitcoin Holdings
- El Salvador will be required to disclose all Bitcoin reserves held by the government and limit future large-scale purchases.
- The IMF has urged the country to prioritise liquidity reserves in U.S. dollars rather than speculative assets like Bitcoin.
- Restrictions on Chivo Wallet and Bitcoin Adoption Programs
- The government’s state-backed Chivo Wallet must adopt stricter consumer protections, with clearer safeguards against potential losses.
- The IMF reportedly advised against further government incentives for Bitcoin adoption, such as subsidies or tax breaks for Bitcoin transactions.
- Reduced Bitcoin Legal Tender Role in Public Debt Payments
- The IMF wants Bitcoin to be phased out as a payment option for sovereign debt obligations, ensuring that El Salvador’s international creditors are repaid in dollars rather than crypto.
These measures are being framed as fiscal prudence by the IMF, but critics see them as an attempt to undermine El Salvador’s Bitcoin experiment and reassert control over the country’s financial system.
Bukele’s Response: A Fight for Sovereignty?
El Salvador’s President Nayib Bukele, a vocal supporter of Bitcoin’s potential as a tool for economic freedom, has pushed back against the IMF in the past. While his administration has not rejected the IMF loan outright, sources indicate disagreements behind closed doors about the depth of the Bitcoin restrictions.
Bukele has branded international financial institutions as outdated and resistant to innovation, frequently arguing that Bitcoin adoption has brought financial inclusion to millions of Salvadorans without access to traditional banking.
However, facing rising debt obligations and pressure from credit rating agencies, Bukele’s government needs the IMF loan to stabilize the economy—making full defiance a risky option. Some insiders suggest the administration may comply with IMF conditions temporarily while continuing to pursue Bitcoin-friendly policies in parallel.
In a recent X (formerly Twitter) post, Bukele responded to criticisms of his Bitcoin strategy by stating:
“They said our economy would collapse. Instead, we grew, we paid off debts, and we keep building. The IMF doesn’t control our future—we do.”
This suggests that while Bukele may agree to certain transparency measures, he remains committed to Bitcoin as part of El Salvador’s long-term financial strategy.
