Recently, officials in the Central American country of El Salvador approved amendments to its controversial Bitcoin law in order to guarantee a $1.4 billion loan with the International Monetary Fund (IMF), according to Reuters.
The amendment passed with 55 lawmakers approving the vote and two remaining opposed. While the IMF has yet to formally approve the loan, the international lender has required El Salvador to make crypto adoption voluntary for private merchants and prohibit tax collection in Bitcoin.
“Acceptance of Bitcoin by the private sector will be voluntary and public sector’s participation in Bitcoin-related activities will be confined,” the IMF said in December.
“Taxes will only be paid in U.S. dollars and the government’s participation in the crypto e-wallet (Chivo) will be gradually unwound. Transparency, regulation, and supervision of digital assets will be enhanced to safeguard financial stability, consumer and investor protection, and financial integrity,” the IMF added.
In December, El Salvador agreed to these conditions, pledging to stop collecting taxes in digital assets and ensuring businesses are not obligated to accept cryptocurrency payments.
Previously, El Salvador required private businesses to accept Bitcoin as a payment method. But the challenges of doing so were immense for merchants, leading to less than a quarter offering crypto payment options. Among those who did, only 12% left their payments in crypto, while 88% immediately converted their crypto into cash.
Despite the scaleback, the crypto industry has largely celebrated the country’s Bitcoin adoption: “President Nayib Bukele has positioned El Salvador as a crypto trailblazer, not only by adopting Bitcoin as legal tender but also by enacting a regulatory framework that supports the tokenization of assets and their distribution,” Michele Crivelli, founder of NexBridge, told TheStreet Crypto. “The legal certainty offered to token issuers and crypto exchanges in El Salvador signals a proactive approach to digital asset innovation — something that global policymakers are watching closely.”
The country is also notable for regularly increasing the size of its Bitcoin treasury, particularly during market downturns. According to the government’s official “Bitcoin Office,” El Salvador currently holds $619 million worth of Bitcoin, equivalent to 6,053 BTC.
