KEY POINTS
- El Salvador will have to wind down the Chivo crypto wallet and public involvement in $BTC 'will be confined'
- The government, under Nayib Bukele's leadership, has been buying 1 Bitcoin daily since late 2022
- Some X users trolled the Salvadoran president, pointing out how Bukele gave in to the IMF's demands
El Salvador, also often called "Bitcoin country," has finally reached a "staff-level agreement" to secure a multi-billion-dollar funding package from the International Monetary Fund (IMF), but it may not have gone the way President Nayib Bukele wanted.
According to the IMF, the financing loan will be used "to address balance of payment needs and support the government's economic reforms."
The IMF Executive Board has yet to approve the agreement and El Salvador has to implement prior actions that the parties agreed on. While the IMF will cover $1.4 billion for the package, additional funding from other regional development banks will bring the overall financing loan to $3.5 billion.
While the loan may be good news for the government and other allied nations, the cryptocurrency community is hot on the heels of Bukele, especially since the loan deal had specific conditions regarding the country's digital assets push.
What Does the Agreement Say About $BTC?
The financing deal states that El Salvador needs to implement legal reforms to "make acceptance of Bitcoin by the private sector voluntary." As seen in the crypto space, institutional involvement in BTC has opened more doors for establishing trust among retail investors.
"For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined," the IMF said. This provision may hurt the Bukele administration's work toward broader BTC adoption in the country.
Finally, the Salvadoran government will have to wind down its involvement in the crypto e-wallet Chivo, a BTC wallet that allows El Salvador citizens and businesses to make cross-border payments in Bitcoin or dollars.
Why the Funding Package is a Big Deal
For starters, Bukele had, for years, refused to bend to the IMF's conditions regarding El Salvador's Bitcoin strategy. The United Nations' financial agency raised serious concerns about El Salvador recognizing Bitcoin as legal tender.
Earlier this year, the IMF said "addressing risks arising from Bitcoin is a key element of our discussions with the [Salvadoran] authorities."
For around three years, Bukele stood his ground on his views regarding the world's largest digital currency by market cap, with the government continuously purchasing 1 BTC daily since late 2022.
Some X users and observers are now trolling the Salvadoran president, pointing out how he buckled to secure the loan from the IMF.
Prominent financial analyst Jacob King had a very straightforward opinion about the matter. "The maxis always say 'fiat is trash,' but look how quick Bukele got bought out by the globalist elites. The irony!" he wrote Wednesday.
"The moment the IMF shows up with a check, the narrative flips. If Bitcoin was really the future, why sell out for fiat?" another user said.
While others were trolling, some took the news in a different light, including one X user who said that the Bitcoin provisions on the IMF funding package makes it "glaringly obvious the global elites are worried about Bitcoin."
One well-followed BTC user said that in El Salvador, BTC use has always been voluntary. "So the IMF negotiated a condition that was already in place. Gangster move by Bukele," the user wrote.
Other crypto users expressed disappointment over the news, considering how El Salvador had been a strong supporter of BTC for years.
This is very disappointing...
— 𝘾𝙧𝙮𝙥𝙩𝙤 𝙇𝙤𝙪𝙣𝙜𝙚 (@Cryptointerface) December 19, 2024
Kinda sad if everything is true. But only if 'everything', because the Chivo Wallet sucked a$$ since the beginning anyways, and it's been voluntary for businesses in real life. So unless the government cannot buy more Bitcoin, and it loses legal-tender status, yes this sucks.
— The Trading Channel 📺📈 (@bingtrading) December 19, 2024
How is Bukele Taking the Heat?
Bukele himself has not yet issued an official statement regarding the backlash over his government's decision to agree with the IMF's terms. However, El Salvador's Bitcoin office posted that "El Salvador keeps stacking 1 BTC per day, every day," about an hour after the IMF's announcement hit the news.
El Salvador keeps stacking 1 BTC per day, every day.
— The Bitcoin Office (@bitcoinofficesv) December 18, 2024
🇸🇻🏆🚀 pic.twitter.com/6gevIr1j4A
Ahead of the loan package's announcement, Bukele also took to X to post a chess piece emoji. The piece he chose was a pawn.
Since news of the IMF's loan agreement with El Salvador broke, Bitcoin plunged to around $100,000. A day earlier, the digital currency hit a new all-time high of $108,000.
