El Salvador has announced its decision to continue the purchase of Bitcoin even at an accelerated level, despite an IMF deal to scale back policies.
The Latin American country is reported to have reached an agreement with the International Monetary Fund (IMF) on a new arrangement under the IMF’s Extended Fund Facility (EFF) for about US$1.4 billion to support the government’s reform agenda.
As part of the deal, the El Salvadorian government agreed to scale back its Bitcoin policies. The deal specified that tax payments would only be made in the other official tender, the U.S. dollar. In line with the deal, the IMF via a press release on its website wrote, “Bitcoin-related risks are being mitigated. Acceptance of Bitcoin by the private sector will be voluntary and the public sector’s participation in Bitcoin-related activities will be confined”.
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On Thursday, the Director of the National Bitcoin Office of El Salvador, Stacy Herbert took to X to disclose that El Salvador has secured a $3.5 million funding deal. She further noted that El Salvador will continue buying Bitcoin at possibly an accelerated pace for its Strategic Bitcoin Reserve.
Part of her tweet reads,
“EL SALVADOR SECURES $3.5 FUNDING DEAL. Bitcoin remains legal tender. El Salvador will continue buying Bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve. Bitcoin capital markets will continue to be built. The Bitcoin Office will continue building bitcoin policy and roadmaps, attracting investors, and building education programs, including the new Grades 2 & 3 Little HODLer bitcoin and money workbooks for January 2025.”
Eugene Epstein, head of trading and structured products for North America at Moneycorp in New Jersey stated that El Salvador’s announcement to make more bitcoin purchases might be just a way to counter any negative blowback from a perceived diminished status of the cryptocurrency in the country.
“Given the size and likely the terms of the IMF deal, it was probably worth it for President Bukele to do that,” she added.
Recall that in 2021, El Salvador became the first country in the world to make Bitcoin a legal tender. Following this decision, the IMF opposed Salvadoran President Nayib Bukele’s crypto-friendly policies, warning that the decision could become an obstacle to it offering financial assistance.
Despite the IMF concerns, the Latin American country refused to scale back on its Bitcoin policy, rather it accumulated more BTC. Currently, El Salvador sits on 5,892.76 BTC, adding 1 BTC daily to its treasury as a public policy since November 2022. After over three years of adopting Bitcoin, this decision is “an absolute net positive for the country. It brought international attention, tourism, and investment, giving El Salvador the irrevocable title of first mover.
In November 2024, when the price of Bitcoin reached a new high at $85,000, the country’s bold investment in Bitcoin was reported to have yielded impressive returns, surpassing $119 million profit. El Salvador’s holdings, tracked by a portfolio tracker for President Nayib Bukele, showed an impressive gain of 86%.
After the price of bitcoin surged further to a milestone price of $100,000 for the first time, Bukele said in a social media post that his country’s holdings in the cryptocurrency had more than doubled in value. The cryptocurrency has rallied since Donald Trump’s election victory on 5 November.
With the U.S. poised to have its first openly pro-crypto president, this development has further fueled Bitcoin’s surge, which has also been a financial boon for other early adopters.
El Salvador’s Bitcoin reserve is poised to experience a significant increase, with the incoming Trump administration, seen as being far more friendly towards cryptocurrencies than President Joe Biden.