KEY POINTS
- The Bitcoin Office's Stacy Herbert explained that $BTC will still be legal tender in El Salvador
- President Bukele also posted an update regarding the country's Bitcoin reserves, which is nearing 6,000
- As part of the IMF loan deal, El Salvador will wind down or sell the Chivo crypto wallet
El Salvador, which prides itself as the first country to recognize Bitcoin as legal tender, signaled it will keep stacking up on BTC despite securing a staff-level agreement with the International Monetary Fund (IMF) for a multi-billion-dollar loan with conditions related to the central American nation's Bitcoin strategy.
The country secured a total of $3.5 billion funding package from the IMF and other regional development banks late last week. The agreement specifies some changes the Salvadoran government has to implement around its BTC strategy, including the "confinement" of engagement in Bitcoin-related activity.
However, it appears that El Salvador's government is moving to calm the crypto community down as it stuck true to its commitment of filling up its BTC strategic reserve.
Bukele Refuses to Let $BTC Go
On Sunday, Salvadoran President Nayib Bukele posted an update on the country's Bitcoin stash, revealing that the country is a few BTC short of hitting 6,000 (approximately $580 million based on current prices).
— Nayib Bukele (@nayibbukele) December 22, 2024
Stacy Herbert, the director of El Salvador's Bitcoin Office, a unit directly under Bukele's administration, said the country's continuing BTC acquisition "is proving the headlines about the IMF deal are wrong."
Herbert referred to concerns that El Salvador may be winding down its Bitcoin strategy and Bukele was supposedly "bought out" easily by the IMF with fiat.
"Just as the US under the coming Trump administration plans to try to become the number one Bitcoin Country in the world, so too are we free to compete to hold that number one spot," Herbert wrote on X Sunday.
Herbert previously clarified that "Bitcoin remains legal tender" in the country despite the IMF loan agreement. She also said the country will continue to purchase BTC "at possibly an accelerated pace."
She did note that "Chivo wallet will be sold or wound down." The Chivo cryptocurrency wallet allows citizens to make international payments in fiat or Bitcoin.
Bitcoiners Laud 'Legend' Bukele for Defying IMF
Bitcoiners on X are now praising Bukele and his Bitcoin Office for refusing to be told what to do regarding its BTC strategy.
"El Salvador has bought 25 Bitcoin worth over $2.4 million since securing its loan from the IMF. Legend," wrote Bitcoin Magazine's editor-in-chief, Nikolaus Hoffman.
NEW: 🇸🇻 El Salvador has bought 25 #bitcoin worth over $2.4 million since securing it's loan from the IMF.
— Nikolaus Hoffman (@NikolausHoff) December 22, 2024
Legend 🫡 pic.twitter.com/5otjTVkmU5
Another user predicted that within two decades, the United Nations' financial agency will be asking El Salvador to leverage its Bitcoin "as collateral for failed nation states."
While many in the crypto community are happy that Bukele's government is standing its ground regarding its Bitcoin vision, there is also concern that the IMF may withhold some future funding or "seek corrective measures" around the agreement if El Salvador disregards the conditions in the initial deal.
El Salvador's Economic Woes
The IMF loan is expected to help El Salvador boost its economy. The country has made significant strides in GDP growth in recent years since Bukele came to power, but poverty remains a serious issue in the country.
The World Bank estimated that around 10% of the Salvadoran public was living in extreme poverty compared to 5% pre-pandemic. Bukele is faced with the challenge of sustaining GDP growth momentum, as well as debt burdens, and other economy-related woes.
It remains to be seen whether Bukele's IMF deal will help improve economic conditions in the country and it its concessions to reach the agreement will be worth it.
