IMF Proposes Bitcoin Purchase Restrictions for El Salvador

The International Monetary Fund (IMF) has proposed new restrictions on Bitcoin purchases by El Salvador's public sector as part of a $1.4 billion funding arrangement. The IMF's technical memorandum of understanding, released on March 3, includes a condition prohibiting the voluntary accumulation of BTC by the public sector in El Salvador. Additionally, the memorandum requests restrictions on public sector issuance of any type of debt or tokenized instrument indexed to or denominated in Bitcoin.

In response to the IMF's conditions, El Salvador's executive director, Méndez Bertolo, stated that the extended fund facility aims to improve governance, transparency, and resilience to boost confidence and the country's growth potential. Bertolo emphasized that Bitcoin-related risks are being mitigated, as the authorities have enacted amendments to the Bitcoin Law that clarify its legal nature and remove essential features of legal tender. Acceptance of Bitcoin will be voluntary, tax payments will be made in US dollars, and the role of the public sector in the Bitcoin project will be confined.

The IMF's conditions and El Salvador's response highlight the ongoing debate surrounding the use of Bitcoin as legal tender and the potential risks associated with its adoption. As the IMF continues to engage with El Salvador on this matter, the country's ability to mitigate these risks and attract additional financial support from international organizations will be crucial for its economic stability and growth.