- As part of an agreement with the IMF, El Salvador intends to relax a rule that mandated companies accept bitcoin as legal cash.
- The Financial Times claims that by making the bitcoin demand optional, the nation will be able to finalize a $1.3 billion loan with the IMF, opening the door for $1 billion loans from the World Bank and Inter-American Development Bank.
El Salvador is to relax a rule requiring local companies to take bitcoin. The Financial Times, citing unnamed sources, said the action is being taken to obtain loans totaling more than $3 billion.
According to the sources, El Salvador can finalize a $1.3 billion loan with The International Monetary Fund by implementing a legislation that makes it optional for companies to accept bitcoin. According to the Financial Times on Monday, that agreement will then open up two loans, one for $1 billion from the World Bank and another $1 billion from the Inter-American Development Bank.
Some people should not be surprised by this result because the IMF reiterated in October that El Salvador should limit the scope of its bitcoin ambitions and related laws. El Salvador was the first country to accept bitcoin as legal cash when its laws went into force in 2021.
The IMF has encouraged [El Salvador’s president] to cease recognizing Bitcoin as legal cash and has opposed El Salvador’s acceptance of the digital currency, citing threats to financial integrity and stability.
President Nayib Bukele of El Salvador, who supported the law to legalize bitcoin, said in August that the country’s monetary experiment had yielded mixed results and that bitcoin had not gained much traction at home.
According to the Financial Times, the nation has also committed to lowering its budget deficit, enacting an anti-corruption law, and raising reserves in order to obtain the IMF loan.
As of May 2024, El Salvador had 5,750 bitcoin, which is currently valued at over $570 million.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
