IMF Demands 4 Key Bitcoin Reforms for El Salvador's $1.4B Loan

IMF Demands El Salvador Scale Back Bitcoin Operations for $1.4 Billion Loan

The International Monetary Fund (IMF) is pressing El Salvador to curtail its state-led Bitcoin activities as a condition for unlocking a $1.4 billion loan program. The demands come as the nation seeks to finalize the Extended Fund Facility (EFF) with the global financial institution.

Key Conditions for Loan Approval

Specific requirements outlined by the IMF include an immediate cessation of any state-initiated Bitcoin accumulation. Furthermore, the organization insists on complete transparency regarding all Bitcoin transactions and the establishment of robust Anti-Money Laundering (AML) frameworks.

El Salvador, which officially adopted Bitcoin as legal tender in 2021, has been engaged in negotiations with the IMF for the substantial loan package. While reforms were made to the nation’s Bitcoin Law in 2024 as part of these discussions, including an agreement not to use public funds for Bitcoin purchases, official trackers indicated a recent increase in the country’s Bitcoin holdings, exceeding 1,000 BTC.

To address this apparent breach of the IMF’s accumulation demand, El Salvador reportedly provided evidence that its latest Bitcoin reserves were sourced entirely from private donations. The nation has also committed to several “prior actions” to satisfy the IMF’s concerns.

Unwinding State Control and Ensuring Volatility

Beyond halting state-led accumulation, the IMF is also demanding that El Salvador relinquish its remaining control over the Chivo e-wallet, a digital wallet previously operated by the state. Currently, a private entity manages the majority of the wallet’s operations.

The IMF also emphasized the importance of maintaining the voluntary nature of Bitcoin usage for both individuals and businesses, and reiterated that Bitcoin tax payments remain prohibited. El Salvador had previously removed state guarantees for the convertibility of BTC to U.S. dollars for merchants, a move that aimed to alleviate the burden on banks holding significant cash reserves.

Transparency and AML Frameworks

A crucial component of the IMF’s demands involves a public audit and full disclosure of El Salvador’s digital asset holdings to mitigate fiscal contingency risks. The organization has also tasked the country with enacting critical AML frameworks specifically designed to govern digital service providers.

Despite these stringent conditions, the IMF acknowledged El Salvador’s notable economic progress, attributing it to improvements in public safety and a rise in investor confidence.

El Salvador’s Bitcoin Holdings

Currently, El Salvador’s national treasury holds 7,789 BTC. With Bitcoin trading at approximately $84,761, these holdings are valued at over $660 million. Based on an average cost basis of $55,718 per BTC, the nation currently holds an unrealized profit of roughly $226 million.