El Salvador has entered into a $1.4 billion Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF), which includes stipulations affecting the nation's Bitcoin policies. A key condition of this agreement is the prohibition of voluntary Bitcoin accumulation by the public sector during the program's duration.

Background:

Bitcoin Adoption: In September 2021, El Salvador became the first country to adopt Bitcoin as legal tender, aiming to promote financial inclusion and stimulate economic growth. The government actively invested in Bitcoin, amassing over 6,081 BTC (approximately $600 million as of February 24, 2025).

IMF Agreement Details:

Loan Approval: In December 2024, the IMF approved a 40-month, $1.4 billion EFF arrangement to support El Salvador's economic reforms.

Bitcoin Restrictions: As part of the agreement, the IMF requires El Salvador to restrict public sector involvement in Bitcoin-related activities, including halting further Bitcoin purchases by government entities.

Policy Adjustments: The government agreed to reduce Bitcoin purchases, cease accepting tax payments in Bitcoin, and gradually withdraw from involvement in the Chivo e-wallet initiative.

Implications:

Financial Oversight: The IMF's conditions aim to mitigate potential risks associated with Bitcoin's volatility and ensure financial stability within El Salvador.

Economic Reforms: The agreement emphasizes the need for transparency, regulation, and supervision of digital assets to safeguard consumer and investor interests.

This development signifies a shift in El Salvador's approach to cryptocurrency adoption, balancing innovative financial strategies with traditional economic frameworks under international guidance.