The crypto space is once again stirred by a new chapter in the ongoing saga between the International Monetary Fund (IMF) and El Salvador.
The latest twist comes after the IMF announced plans to prevent El Salvador from making further Bitcoin purchases, only for the country to top up its BTC reserves.
New Chapter, Same Standoff
The IMF said Tuesday it would take steps to ensure El Salvador doesnโt increase its Bitcoin holdings, despite President Nayib Bukeleโs unwavering push to expand the countryโs Bitcoin reserves.
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The announcement was accompanied by news that the IMF has agreed to disburse $120 million as part of a broader $1.4 billion loan package aimed at stabilizing El Salvadorโs struggling economy.ย ย
Shortly after, El Salvadorโs National Bitcoin Office posted a proud message declaring the country had just bought more Bitcoin:
In the past seven days alone, El Salvador acquired 8 more BTC, worth approximately $869,640, bringing its total holdings to 6,190.18 BTC, valued at nearly $673 million.
Mounting Tensions Over Bitcoin
The conflict dates back to December 2024, when the IMF approved the 40-month, $1.4 billion financing program for El Salvador. One of the conditions was that El Salvador would limit government involvement in Bitcoin-related activities, including pausing all new BTC acquisitions.
El Salvador made global headlines in 2021 when it became the first country to adopt Bitcoin as legal tender. Since then, President Nayib Bukeleโs administration has steadily built a national Bitcoin reserve.
To comply with IMF requirements, El Salvador amended its Bitcoin Law this year, removing Bitcoin’s status as legal tender and making its acceptance optional for businesses, rather than mandatory.ย
Despite these agreements, President Bukele pledged to continue acquiring Bitcoin under the โone BTC a dayโ strategy.
The IMF acknowledged earlier that El Salvador has made progress on important economic reforms and has met most of the goals outlined in the program.
How Could IMF Push Back on El Salvadorโs Bitcoin Plans
The IMF has not yet transferred a $120 million payment to El Salvador, as it still requires official approval from the IMFโs Executive Board.
While the IMF canโt directly block El Salvador from buying more Bitcoin or force it to sell its holdings, it does have tools to apply pressure to the countryโs crypto policy.
For instance, the IMF attaches stricter conditions to future $1.4 billion loan disbursements. The Fund may require El Salvador to halt its increase in Bitcoin reserves or to comply with stricter transparency rules, such as publicly reporting cryptocurrency transactions or auditing government Bitcoin spending.
The IMF can also influence other global lenders, such as the World Bank, potentially discouraging them from working with El Salvador and further isolating the country financially.
Why It Matters
While President Nayib Bukele continues to support his “one Bitcoin a day” strategy, the IMF’s position presents a challenge for El Salvador.
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