El Salvador plans to ease bitcoin acceptance requirement to unlock $3 billion in loans: report
Quick Take
- El Salvador plans to ease a policy that required businesses to accept bitcoin as legal tender as part of a deal with the IMF.
- By making the bitcoin requirement voluntary, the country will be able to close a loan with the IMF worth $1.3 billion, paving the way for $1 billion loans from both the World Bank and Inter-American Development Bank, according to the Financial Times.
El Salvador plans to ease a requirement that forced local businesses to accept bitcoin. The move is being made to secure more than $3 billion in loans, according to the Financial Times, which cited anonymous sources.
By shifting to a policy that makes it voluntary for businesses to accept bitcoin, El Salvador can close a loan with The International Monetary Fund worth $1.3 billion, the sources said. That deal will then unlock two loans, one of $1 billion from the World Bank and another $1 billion from the Inter-American Development Bank, the Financial Times reported on Monday.
The development may not come as a surprise to some, as back in October, the IMF repeated its recommendation that El Salvador narrow the scope of its bitcoin ambitions and accompanying legislation. When El Salvador’s bitcoin legislation took effect in 2021, it became the first nation to adopt the cryptocurrency as legal tender.
"The IMF opposed El Salvador’s adoption of the digital currency, citing risks to financial stability and integrity, and has urged [El Salvador's president] to stop accepting cryptocurrency as legal tender," the report said.
In August, El Salvador President Nayib Bukele, who championed the bill to make bitcoin legal tender, conceded the nation's monetary experiment had mixed results, adding that bitcoin had seen limited domestic adoption.
To secure the IMF loan, the country has also agreed to reduce its budget deficit, pass an anti-corruption law and increase reserves, the Financial Times said.
El Salvador possessed 5,750 bitcoin as of May 2024, which is now worth about $570 million. Bitcoin was changing hands at $99,259.99 as of 9:42 a.m. ET, according to The Block Price Page.
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