El Salvador Scales Back Bitcoin Ambitions in IMF Deal

El Salvador, the first country to adopt Bitcoin (BTC) as legal tender, has reportedly passed new legislation that scales back its crypto efforts. The move comes as part of a deal with the International Monetary Fund (IMF) for a $1.4 billion loan facility.

According to Reuters, El Salvador's lawmakers approved a bill on Wednesday to amend the nation's Bitcoin law, aligning with the agreement reached with the IMF. In December, the government of El Salvador and an IMF staff team agreed to the loan facility, with the condition that businesses would have the choice to accept cryptocurrency payments.

El Salvador plans to use the funds to support economic reforms. The IMF states that the arrangement under the Extended Fund Facility (EFF) will help mitigate the country's Bitcoin-related risks. The potential risks of the Bitcoin project will be significantly reduced, in line with IMF policies. Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.

El Salvador's congress, dominated by President Nayib Bukele's New Ideas Party, approved the reform with 55 votes in favor and two against. The agreement is still subject to the approval of the IMF Executive Board and conditioned on El Salvador's fulfillment of the terms.