El Salvador Resists IMF Pressure, Adds 19 BTC to National Reserves

• El Salvador defies IMF pressure, adding 19 BTC to its reserves, reinforcing its Bitcoin commitment despite financial restrictions.
• A Bitcoin law amendment aligns with IMF terms but keeps BTC as legal tender, balancing compliance with crypto-friendly policies.
• Global Bitcoin adoption shifts as the U.S. considers a Crypto Strategic Reserve, potentially validating El Salvador’s BTC strategy.

As per Bitcoin Archive, the IMF demands El Salvador stop buying Bitcoin as a condition for further funding. Despite this, President Nayib Bukele confirmed an increase in the country’s Bitcoin (BTC) holdings. El Salvador acquired 19 BTC in under a week, spending around $1.5 million. This brings the nation’s total reserves to 6,100 BTC, valued at approximately $500 million at current market prices.

IMF’s Pushback and El Salvador’s Response

The IMF has explicitly banned further Bitcoin hoarding in its 40-month, $1.4 billion Extended Fund Facility (EFF) agreement with El Salvador. The agreement also bans the issuance of debt collateralized by Bitcoin and creating new public institutions that trade in cryptocurrency. Nevertheless, Bukele’s administration is still holding on to Bitcoin, going against the IMF’s strategy.

Apart from the IMF’s limitations, international financial institutions still have reservations regarding El Salvador’s economic risks. Bukele is certain that investing in Bitcoin will strengthen the nation’s financial position in the long run. His administration maintains that the long-term benefits of Bitcoin’s growth will accrue to the nation.

Bitcoin’s Legal Status and Economic Implications

In 2021, El Salvador became the first nation to accept Bitcoin as payment. The phrase “currency” was eliminated in a recent revision to the Bitcoin Law, yet Bitcoin was still accepted as legal money. The change, which is in line with IMF guidelines, keeps Bitcoin within the nation’s financial system while relieving businesses of the temptation to accept it.

This adjustment ensures compliance with the IMF deal while allowing the government to retain its Bitcoin-friendly policies. Economic analysts suggest this change aims to secure IMF funding without completely abandoning Bitcoin.

Moreover, the global perception of state-backed Bitcoin reserves is evolving. With the approval of a Crypto Strategic Reserve by former U.S. President Donald Trump, the U.S. may begin accumulating Bitcoin. If this happens, El Salvador’s stance could gain further validation.