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Based on available reports, El Salvador has bought 11 Bitcoins worth over $1 million just a day after signing a $1.4 billion deal with the International Monetary Fund. The purchase was announced by the National Bitcoin Office on X, formerly Twitter, on December 19. The post read:
“We have transferred over a million dollars worth of Bitcoin to our Strategic Bitcoin Reserve.” This brings El Salvador’s total Bitcoin holdings to 5,980.77 BTC, worth around $580 million at $97,000.
Balancing IMF Conditions and Bitcoin Strategy
The IMF deal came with some conditions that were supposed to reduce government involvement in Bitcoin. Among them were winding down government-led transactions, privatizing the state-run Chivo crypto wallet, and ensuring taxes are only being paid in US dollars. It also said Bitcoin in the private sector should be voluntary. Despite these, National Bitcoin Office head Stacy Herbert said on social media:
“We will keep buying one Bitcoin a day (likely even more in the future), and we will not sell any of our current holdings. Bitcoin continues to be our main strategy.”
This continuous determination shows El Salvador’s two-track approach: comply with IMF oversight and go full steam on crypto.
IMF’s Concerns
These measures, according to the IMF, which previously criticized El Salvador’s adoption of Bitcoin, are meant to mitigate financial risks. The global financial institution had earlier expressed concerns over Bitcoin’s volatility and how it could destabilize public finances. An IMF spokesperson said the deal is to ensure responsible economic governance, saying:
“The government’s Bitcoin-related economic activities must be contained so as not to jeopardize financial stability.”
However, the deal still needs to be approved by the IMF Executive Board and is expected to be concluded in the coming months. If that happens, it will be the end of four years of the IMF-El Salvador negotiations, which mostly involved President Nayib Bukele’s Bitcoin plans.
Bitcoin Strategy in Motion
In September 2021, El Salvador made Bitcoin its legal tender and has since been ahead leading in the world along the Bitcoin adoption path. The current administration of Bukele allegedly started buying “one Bitcoin a day” as back as November 2022. This latest purchase is more aggressive in building the country’s Bitcoin reserves.
These developments show the government is making sure Bitcoin is part of the country’s financial strategy even as it complies with IMF conditions.
Global Impact
El Salvador’s latest Bitcoin purchase has global implications. Critics say it’s too risky to rely so much on a volatile asset, while others see it as a bold experiment in financial independence.
This is a big experiment and has inspired other countries to consider adding cryptocurrencies to their economies. It’s also got international institutions nervous about Bitcoin’s potential to disrupt traditional financial systems.
The IMF deal is a turning point for El Salvador as it balances its crypto plans with international financial support.
Conclusion
El Salvador chose to buy more Bitcoin just after striking a deal with the IMF. That could only tell how committed it is to Bitcoin. The government is navigating the IMF conditions and buying more Bitcoin, setting a precedent for other countries to consider digital currencies. Only time will tell whether this will make El Salvador a global crypto leader or increase economic risk.
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FAQs
1. How many Bitcoins does El Salvador have?
El Salvador currently has 5,980.77 BTC, which is valued at around $580 million, as of December 2024.
2. What are the IMF conditions for the $1.4 billion loan?
IMF conditions are to restrict government-led Bitcoin activities, privatize the Chivo wallet and all tax payments in US dollars.
3. Is Bitcoin still legal tender in El Salvador?
Yes, Bitcoin is still legal tender in El Salvador but private sector use is voluntary under IMF agreement.
4. What’s El Salvador’s long-term Bitcoin plan?
To buy more Bitcoin, pass some of the responsibility to private sector wallets, and comply with international standards.
