IMF Imposes Bitcoin Ban on El Salvador's Public Sector

The International Monetary Fund (IMF) has implemented new restrictions on El Salvador's public sector Bitcoin purchases, as part of a $1.4 billion Extended Fund Facility agreement. The IMF's Technical Memorandum of Understanding, issued on March 4th, prohibits any Bitcoin accumulation by governmental entities and bans the issuance of debt instruments linked to Bitcoin or priced in Bitcoin.

El Salvador's Executive Director, Méndez Bertolo, stated on February 26th that these measures aim to strengthen governance and transparency while mitigating Bitcoin-associated risks. Recent amendments to the Bitcoin Law have clarified its legal status, determining that acceptance of Bitcoin will be voluntary and tax obligations will remain in dollars, thus limiting the public sector's role in Bitcoin initiatives.

This strategic realignment is expected to attract significant financial support from major institutions such as the World Bank and the Inter-American Development Bank, enhancing the nation's economic stability while carefully managing cryptocurrency exposure.