IMF compromise for lifesaving money? Report: El Salvador to amend law, no longer pushing for Bitcoin payments

El Salvador, the world's first country to adopt bitcoin as legal tender, may now have to bow to the International Monetary Fund (IMF) under real pressure.

According to the Financial Times, in order to meet the conditions of the IMF and obtain international loans totaling $3 billion, El Salvador intends to modify regulations and cancel the requirement for merchants to accept BTC payments.

IMF pressure, BTC legislation compromise?

In 2021, President Nayib Bukele of El Salvador pushed for BTC to become a legal currency on par with the US dollar with lightning speed.

However, the IMF has been opposed to this policy from the beginning, believing that Bitcoin may pose a risk to national financial stability, and has repeatedly asked El Salvador to reduce the scope of its Bitcoin policy.

According to the Financial Times, in order to obtain a $1.3 billion loan from the IMF, as well as an additional $1 billion in aid from the World Bank and the Inter-American Development Bank (IDB), El Salvador intends to compromise by no longer mandating all national merchants to accept Bitcoin as a form of payment, but instead allowing merchants to choose whether to accept BTC payments themselves.

This $3 billion aid, undoubtedly a timely rain for financially burdened El Salvador.

BTC adoption falls short of expectations, with limited impact from policy adjustments.

Although BTC has gained a lot of exposure for El Salvador internationally, its actual application is not as expected.

According to a survey conducted earlier this year, up to 88% of Salvadorans have not used BTC for transactions at all in 2023. Although many merchants claim to accept BTC payments, the actual usage is very low. Therefore, the direct impact of this policy adjustment on the domestic BTC ecosystem may not be as significant as imagined.

There is not just one IMF condition, but there is great pressure for fiscal reform.

In addition to relaxing BTC payment regulations, El Salvador also needs to commit to reducing government spending, increasing tax revenue, and reducing the fiscal deficit to 3.5% of GDP within 3 years.

In addition, the IMF also requires El Salvador to pass an anti-corruption bill and increase forex reserves, which shows that the IMF is not only following the impact of BTC on the national financial system, but also focusing on the overall financial stability of El Salvador.

As the first country in the world to attempt "BTC fiatization", every step of El Salvador has brought inspiration to the global Cryptocurrency development. This national BTC experiment, despite being controversial and challenging, has opened a story that is far from over.

In the future, how El Salvador balances between the fiscal regulations of the IMF and the freedom of BTC policy will be the focus of global attention.

Negotiations for financial assistance continue! IMF demands El Salvador: restrict the Bitcoin Law, reduce BTC investments

This article was first published in "BlockTimes".