El Salvador has secured a $1.4 billion loan agreement with the International Monetary Fund (IMF) after agreeing to reduce its contentious Bitcoin policies.
The IMF stated that risks associated with adopting the cryptocurrency have now eased, as businesses will no longer be obligated to accept Bitcoin.
El Salvador made history in 2021 as the first nation to declare Bitcoin as legal tender. This week, the cryptocurrency briefly surged to a record high, surpassing $108,000.
“The potential risks of the Bitcoin initiative will be significantly reduced in accordance with IMF policies,” the IMF’s announcement noted. “New legal reforms will ensure Bitcoin adoption by private businesses remains voluntary, while the public sector’s involvement in Bitcoin-related activities, transactions, and purchases will be restricted.”
The loan, designed to stabilize El Salvador’s economy, still requires final approval from the IMF’s executive board.
The IMF had previously opposed President Nayib Bukele’s Bitcoin-friendly policies, cautioning that they could hinder financial assistance.
Despite IMF concerns, Bukele celebrated Bitcoin’s recent surge on social media, particularly following Donald Trump’s US election victory in November. Trump’s administration is viewed as being more favorable to cryptocurrencies compared to President Joe Biden’s White House.
Earlier this month, as Bitcoin prices surpassed $100,000, Bukele claimed the value of El Salvador’s Bitcoin holdings had more than doubled. He also criticized political opponents for discouraging Salvadorans from benefiting from Bitcoin’s price rise.
However, on Thursday, Bitcoin saw a decline alongside global markets after the US Federal Reserve indicated a slower pace of interest rate cuts in the coming year. The cryptocurrency is currently trading near $100,000.
