El Salvador has secured a $1.4 billion extended fund facility from the International Monetary Fund (IMF), but the deal comes with major strings attached—chiefly, new constraints on the country’s controversial #Bitcoin policies.
The agreement forms part of a broader $3.5 billion support package aimed at stabilizing El Salvador’s economy. In return, the government must freeze its Bitcoin reserves, currently totaling around 6,190 $BTC (valued near $675 million), and cease all new public sector Bitcoin purchases. This marks a notable shift in strategy for President Nayib Bukele, who made headlines globally by declaring Bitcoin legal tender in 2021.
A critical component of the IMF’s terms is the gradual dismantling of the state’s involvement in the Chivo wallet, the government-run crypto wallet launched to support Bitcoin adoption. This phase-out is set to be completed by July 2025, effectively ending state-managed retail crypto operations.
> “Efforts will continue to ensure that the total amount of #Bitcoin held across all government-owned wallets remains unchanged, consistent with program commitments,” said an IMF spokesperson.
The deal signals a broader cautionary stance from the IMF regarding government-level exposure to digital assets. By capping further purchases and scaling back public crypto infrastructure, the IMF is drawing a regulatory line that could influence other nations experimenting with state-backed crypto initiatives.
Economists warn that this could cool enthusiasm for similar projects worldwide, as international lenders favor financial stability over crypto volatility. While El Salvador isn’t abandoning #Bitcoin outright, the government’s revised position could reshape how crypto is integrated into national economies.
For now, all eyes are on how El Salvador navigates this new phase—balancing its Bitcoin ambitions with the fiscal discipline required by global financial institutions.
