El Salvador has finalized a loan agreement worth $1.4 billion (£1.1 billion) with the International Monetary Fund (IMF) following its decision to reduce its contentious bitcoin policies. The global financial institution indicated that the risks associated with the adoption of bitcoin, the largest cryptocurrency, have diminished, as businesses will now have the discretion to choose whether to accept it. In 2021, El Salvador made history by becoming the first nation to recognize bitcoin as legal tender. Recently, the cryptocurrency reached a new peak, exceeding $108,000.
The IMF stated that the potential risks linked to the Bitcoin initiative would be significantly reduced in accordance with its policies. It noted that legal reforms would render the acceptance of bitcoin by the private sector optional, while the public sector’s involvement in bitcoin-related economic activities and transactions would be limited.
This agreement, intended to bolster El Salvador’s economy, is pending approval from the IMF’s executive board. The IMF had previously expressed opposition to President Nayib Bukele’s pro-crypto stance, cautioning that it could hinder the provision of financial support. Nevertheless, Bukele took to social media to celebrate the rise of bitcoin following Donald Trump’s election victory in November. Earlier this month, as bitcoin surpassed the $100,000 mark for the first time, Bukele remarked on social media that the value of his country’s bitcoin holdings had more than doubled. He also attributed the missed opportunities for many Salvadorans to his political adversaries.
The cryptocurrency has surged since Trump’s election win on November 5, with the incoming administration perceived as more favorable towards cryptocurrencies compared to President Joe Biden’s administration. However, on Thursday, bitcoin experienced a decline alongside global stock markets after the US Federal Reserve indicated a slower pace of interest rate reductions in the coming year. Currently, bitcoin is trading at approximately $100,000.
