El Salvador changes the game: new Bitcoin law in response to IMF deal

El Salvador changes the game: new Bitcoin law in response to IMF deal

El Salvador, known for its revolutionary policies towards cryptocurrencies, has just swiftly passed new legislation that fundamentally changes the rules for Bitcoin use in the country. The move is in response to an agreement reached with the International Monetary Fund (IMF), which requires limiting government involvement in cryptocurrencies and ensuring the continued development of financial stability.

According to a Reuters report, the new law was ratified by the Salvadoran Congress just minutes after President Nayib Bukele introduced it. The change comes on the heels of a $1.4 billion loan agreement El Salvador reached with the IMF in December. The IMF requires Bitcoin to become a voluntary means of payment for private sector merchants, reversing a previous regulation that required businesses to accept Bitcoin as a legal currency.

The reform was approved with strong support, with 55 MPs voting in favour and only two against. Lawmaker Elisa Rosales of the ruling party stressed that the move was necessary to ensure the "permanence of Bitcoin as legal tender" and to facilitate its "practical implementation."

Despite these changes, El Salvador continues to show ambition in the cryptocurrency sector. Recently, the country purchased an additional 12 BTC for its strategic reserves. According to a spokesperson for the El Salvador Bitcoin Office, El Salvador plans to continue its Bitcoin purchases, with plans to "ramp up" its activity in 2025. Currently, El Salvador has 6,049 BTC in its reserves, equivalent to approximately $633 million with an average gain of 127% at a purchase price of $46,000 per Bitcoin.

El Salvador became a pioneer when it enacted Bitcoin as legal tender in 2021, sparking much interest and controversy on a global level. Meanwhile, in the political context, former US Senator Bob Menendez, who opposed El Salvador's adoption of Bitcoin, was sentenced to 11 years in prison for corruption, demonstrating the complex dynamics between politics and the cryptocurrency market.

As El Salvador copes with the new regulatory requirements, the question remains what the long-term effects of these changes will be on the country's economy and its position in the global cryptocurrency market.

*This is not an investment recommendation.

Coingarage team