El Salvador has amended its Bitcoin regulations as a part of a deal with the International Monetary Fund.
According to Reuters, El Salvador Congress has approved the reforms within minutes of receiving them from President Nayib Bukele, aligning the country’s Bitcoin policies with the terms of its $1.4 billion loan agreement with the IMF.
El Salvador, once locked out of traditional financial markets due to its high debt and unconventional Bitcoin experiment, had little choice but to seek a lifeline. With soaring bond yields and limited access to fresh capital, the IMF deal became a necessary pivot to support the government’s economic overhaul agenda
The move was necessary to ensure Bitcoin’s “permanence as legal tender” while facilitating its “practical implementation,” said ruling party lawmaker Elisa Rosales as the amendment was passed with 55 votes in favor.
Under the amended legislation, businesses are no longer mandated to accept Bitcoin as payment, thereby making its use voluntary. It also restricts tax payments to U.S. dollars and paves the way for scaling back government-led crypto initiatives, including the state-backed Chivo wallet.
Nevertheless, Bitcoin remains a legal tender in the nation as it continues to accumulate more of the flagship currency. According to data from the National Bitcoin Office, El Salvador currently holds 6,049 BTC, valued at approximately $633 million, with an unrealized profit of 127%.
A day after striking a deal with the IMF, El Salvador doubled down on its Bitcoin accumulation strategy by deviating from its “1 Bitcoin a day” program to scoop up 11 BTC valued at over $1 million at the time.
At the time, the National Bitcoin Office’s director, Stacy Herbert, said the country plans to accumulate Bitcoin at an “accelerated pace.” As a part of its latest purchase, the country added 12 BTC on Jan. 21.
El Salvador became the first nation to accept Bitcoin as legal tender on Sept. 6, 2021, and has since launched several crypto-focused initiatives to integrate Bitcoin into its economy. The government has installed over 200 Bitcoin ATMs, making the country one of the most Bitcoin-friendly regions for transactions.
Other initiatives include Volcano Energy, a Bitcoin mining project that uses renewable energy from volcanic sources to mine Bitcoin, and Volcano Bonds, a Bitcoin-backed bond initiative designed to raise funds for infrastructure projects and the development of Bitcoin City—a proposed tax-free crypto hub powered by geothermal energy.
On January 13, crypto industry giant Tether Group said it would relocate its entire operations to El Salvador after it secures a Digital Asset Service Provider license in El Salvador via Bitfinex Derivatives, its Seychelles-based affiliate. The announcement came less than a week after Bitfinex Derivatives secured the said license.
