Compromise on 3.5 billion pesos to IMF! The official Wallet of El Salvador may be retired, but it does not give up buying Bitcoin

The loan protocol adjusts the BTC policy, and merchants are no longer required to accept it.

The Salvadoran government recently reached a $3.5 billion loan protocol with the International Monetary Fund (IMF). As one of the exchange conditions, the country has made significant concessions on its BTC policy: BTC is no longer a mandatory legal tender payment tool for merchants, and the government-led Chivo e-wallet will gradually exit the stage. This means that the country's well-known BTC experiment will enter a "correction phase." The IMF stated that the new policy will reduce the risks that the BTC plan may pose, making the currency system more stable.

However, El Salvador has not completely abandoned BTC. Stacey Herbert, Director of the National Bitcoin Office (NBO), said, 'BTC is not leaving, and neither are we.' She emphasized that while the Chivo wallet may be sold or retired, other private sector crypto-related applications can still continue to operate domestically. And she shared El Salvador's upcoming plans on X:

BTC is still a legal currency.

El Salvador will continue to purchase BTC (possibly at a faster pace) for its strategic BTC reserves.

The BTC capital market will continue to develop, such as the recent tokenization of US Treasury bonds on Liquid through NexBridge, and more developments related to the BTC capital market that will be announced soon.

The BTC office will continue to develop BTC policies and roadmaps, attract investors, and promote educational programs, including the new 'Little HODLer BTC and Currency Workbook' for second and third graders launching in January 2025.

CUBO+ continues to cultivate top BTC and Lightning developers in El Salvador, and another group of over 20 students will graduate at the end of January 2025.

Mi Primer Bitcoin and Node Nation continue to conduct education in high schools in El Salvador.

ESIAP continues to advance its BTC certification program for 80,000 civil servants.

Chivo wallet will be sold or terminated, but many private sector BTC wallets will continue to serve El Salvador.

Source: Stacey Herbert, Director of the National Bitcoin Office (NBO) of X, shares the upcoming plans of El Salvador on X.

Tax is only collected in USD, government involved in limiting BTC activities

According to the protocol terms, in the future, merchants' acceptance of BTC will be changed to 'voluntary' rather than mandatory, and the government will impose strict restrictions on cryptocurrency-related economic activities and BTC purchases. The IMF pointed out that taxes will only be paid in US dollars in the future, and BTC cannot be used for tax payment. This will significantly reduce the role of BTC in the national economy and weaken the 'mandatory acceptance of BTC by all citizens' position originally ensured by the law.

Although this concession may seem to deviate from previous aggressive policies, the IMF's approved loan is crucial for stabilizing the economy and reducing debt in the country's urgent need for financial boost. According to reports, the $1.4 billion provided by the IMF itself is only a part of the total $3.5 billion plan, with other World Bank and regional development banks also participating to provide El Salvador with more international financial assistance.

The Kingdom of Saa still holds a large amount of BTC and is expected to continue buying in the future.

Although this protocol requires the government to reduce its involvement in BTC activities, it does not directly impact El Salvador's BTC holdings. According to El Salvador's BTC reserve data, the country currently holds over 5,980.77 BTC, with a market value of approximately $583 million. Stacey Herbert pointed out that the government still plans to continue buying BTC and may increase its holdings at a faster rate. In addition, BTC education, BTC capital market development, and other blockchain-related projects will not be affected by this.

Image source: El Salvador BTC reserve

This move reveals the dual nature of the Salvadoran government's policy: adjusting domestic regulations under IMF financing pressure to no longer enforce BTC, but at the same time retaining BTC as a strategic reserve and element of financial innovation. Clearly, President Nayib Bukele's faith in BTC has not wavered, but has shifted from a "comprehensive national promotion" to a "private sector-led," government-retreated model.

The significance of the global cryptocurrency industry

The IMF has always been skeptical of El Salvador's BTC plan, fearing that the country would bear significant volatility risks. Now, through this loan protocol, the IMF finally brings El Salvador's policy trajectory closer to traditional financial norms. Although this adjustment reduces the 'purity' of BTC as a legal tender experiment, it also establishes a balanced demonstration for international organizations and the digital currency ecosystem.

Earlier, El Salvador became the first country to adopt BTC as a legal currency in September 2021, which once received high attention from the global crypto community. Although the domestic adoption did not meet official expectations, this experiment has profoundly influenced other countries' consideration of the positioning of digital currencies. Now, under IMF pressure to adjust its policies, it may provide a reference for other countries: on one hand, to utilize cryptographic technology to develop financial innovation, but still need to consider international organization standards and loan conditions.

All in all, the $1.4 billion protocol between El Salvador and the IMF provides a crucial clue for the direction of cryptocurrency policy: the national policy is shifting from 'radical' to 'compromise', neither completely abandoning Bitcoin nor mandating its integration into daily economic activities. The upcoming market trends, public reactions, and whether other emerging countries will follow suit, will all be the focus of continued observation by various sectors.

【Disclaimer】There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. The responsibility for investment lies with the user.

'Compromise with IMF for 3.5 billion pounds! The official wallet of El Salvador may be retired, but it will not give up buying BTC.' This article was first published in 'Cryptocurrency City'.