El Salvador’s government may change part of its Bitcoin law to comply with an agreement reached with the International Monetary Fund (IMF). According to recent information from the Financial Times, merchants in El Salvador would no longer be required to accept bitcoin (BTC) as a national means of payment, and instead, accepting bitcoin could become voluntary.
This law change is among the conditions set by the IMF for El Salvador to gain access to a $1.3 billion loan program. The World Bank and the Inter-American Development Bank are anticipated to lend the nation an additional $1 billion each, for a total of $3.3 billion. The agreement is expected to be finalised within the next two to three weeks.
El Salvador has faced consistent pressure from global financial institutions for years. The nation made headlines in 2021 by declaring bitcoin as legal tender, giving the leading cryptocurrency equal regulatory status to the nation’s official currency, the US dollar. This move significantly impacted the traditional financial markets.
At the current bitcoin price of roughly $100,000, the country’s bitcoin holdings already amount to almost $600 million. Although the IMF has been critical of El Salvador’s approach to bitcoin, changing the law is unlikely to significantly impact the acceptance of bitcoin across the nation. Unfortunately, this acceptance has not yet reached its target levels.
A survey conducted by Central American University, Bukele’s alma mater, in January showed that 88% of Salvadorans surveyed did not use bitcoin in 2023. In addition to amendments to the Bitcoin Act, the Salvadoran government must also agree to reduce the budget deficit to 3.5% of GDP within three years through spending cuts and tax increases to comply with the IMF’s conditions.
Further requirements include increasing reserves and passing an anti-corruption law. In addition to the Bitcoin law, El Salvador’s National Commission for Digital Assets (CNAD) has developed a comprehensive regulatory framework for cryptocurrencies. The government has not yet released an official statement regarding the Financial Times’ report.
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