El Salvador's Bitcoin freeze compliance praised by IMF

El Salvador has been acknowledged by the International Monetary Fund (IMF) for adhering to its agreement to cease Bitcoin accumulation in the public sector. This recognition comes as the Central American nation continues to navigate its complex relationship with the cryptocurrency, which it adopted as legal tender in 2021. The IMF's confirmation underscores El Salvador's commitment to meeting the conditions set by the international financial institution for a $1.4 billion loan. The loan, agreed upon in December 2024, required the government to drop Bitcoin's status as legal tender and halt public sector purchases of the cryptocurrency.

Despite the halt in public sector Bitcoin purchases, El Salvador has quietly expanded its Bitcoin holdings. This apparent contradiction is due to the fact that the government has been accumulating Bitcoin through private sector means, rather than through direct public sector purchases. The IMF has acknowledged this distinction, stating that El Salvador remains in compliance with its pledge to stop Bitcoin accumulation in the public sector. This compliance is a key performance target for the IMF, and the fund has confirmed that El Salvador continues to meet this target.

El Salvador President Nayib Bukele pushed back against those conditions earlier this year, saying, “’This all stops in April.’ ‘This all stops in June.’ ‘This all stops in December.’ No, it’s not stopping. If it didn’t stop when the world ostracized us and most ‘Bitcoiners’ abandoned us, it won’t stop now, and it won’t stop in the future. Proof of work > proof of whining.”

Data from the blockchain “de-anonymizer” Arkham shows that the El Salvador government has been acquiring one BTC every single day for some time. However, Rodrigo Valdes, the director of the IMF’s Western Hemisphere Department, says that despite these purchases, the country is still working within its “performance criteria” set forth by the IMF. “In terms of El Salvador, let me say that I can confirm that they continue to comply with their commitment of non-accumulation of bitcoin by the overall fiscal sector, which is the performance criteria that we have. But on top of that, I think this is very important for the discussion in El Salvador. The program of El Salvador is not about bitcoin. It’s much more, much deeper in structural reforms, in terms of governance, in terms of transparency. There is a lot of progress there. And also, on fiscal. And authorities have been making a lot of progress implementing the reform.”

The IMF's recognition of El Salvador's compliance with its Bitcoin freeze is significant for several reasons. Firstly, it demonstrates the government's commitment to meeting the conditions set by the IMF for the $1.4 billion loan. Secondly, it highlights the complex nature of El Salvador's relationship with Bitcoin, which it adopted as legal tender in 2021. The government's decision to halt public sector Bitcoin purchases, while continuing to accumulate the cryptocurrency through private sector means, underscores the challenges it faces in balancing its commitment to the IMF with its desire to promote the use of Bitcoin.

The IMF's confirmation also raises questions about the future of Bitcoin in El Salvador. While the government has halted public sector purchases of the cryptocurrency, it continues to accumulate Bitcoin through private sector means. This suggests that the government remains committed to promoting the use of Bitcoin, despite the challenges it faces in doing so. The IMF's recognition of El Salvador's compliance with its Bitcoin freeze is a positive development for the government, but it remains to be seen how it will navigate its complex relationship with the cryptocurrency in the future.