El Salvador is stepping up its Bitcoin purchases just a day after sealing a significant deal with the International Monetary Fund (IMF), which necessitated some scaling back of its government-led crypto initiatives. On December 19, this Central American nation, famous for becoming the first to recognize Bitcoin as legal tender, acquired an additional 11 BTC, valued at over $1 million. This latest acquisition pushes El Salvador’s total Bitcoin holdings to more than 5,980 BTC, amounting to approximately $577 million, as indicated by the National Bitcoin Office’s tracker.
Previously, El Salvador complied with a steady accumulation strategy termed “1 Bitcoin a day,” introduced by President Nayib Bukele after legalizing the cryptocurrency in 2022. However, this latest purchase marks a shift from that path, demonstrating the National Bitcoin Office’s commitment to buy Bitcoin at an “accelerated pace,” as highlighted by office director Stacy Herbert on the same day.
The backdrop for this bold financial move is the newly inked $1.4 billion IMF deal. This agreement demands adjustments to El Salvador’s Bitcoin policy, with the global financial body warning about the economic vulnerabilities that widespread Bitcoin adoption could bring to the country’s financial system.
Part of the terms requires El Salvador to eliminate the requirement for businesses to accept Bitcoin, making it optional instead. Additionally, tax payments will now be restricted to US dollars. As a result, El Salvador is set to phase out the Chivo crypto wallet, established in 2021 as a state-supported platform for Bitcoin transactions.
Despite these changes, Herbert affirms that El Salvador will maintain Bitcoin as legal tender and intensify its commitment to becoming a Bitcoin-centric economy. This ongoing commitment includes enhancing Bitcoin capital markets, implementing educational programs, and promoting private-sector Bitcoin wallets to cater to the expanding ecosystem.
Future initiatives will remain focused on blockchain developer training and financial literacy programs. These efforts reflect El Salvador’s ambition as other nations express growing interest in Bitcoin, inspired by incoming US President Donald Trump’s proposal to create a strategic Bitcoin reserve.
Meanwhile, Brazilian regulators have suggested allocating 5% of their $370 billion treasury for a strategic Bitcoin reserve. In Russia, a parliamentary deputy has urged Finance Minister Anton Siluanov to explore a similar strategy. Even in Poland, Minister Sławomir Mentzen proposed holding Bitcoin to cultivate a more crypto-friendly atmosphere.
As the global dialogue around Bitcoin intensifies, El Salvador’s latest actions signal its unwavering stance on crypto and its intentions to develop a leading position in the cryptocurrency landscape. The rapidly changing dynamics within Bitcoin policy and adoption indicate a fascinating future ahead for this small yet impactful nation.
