As a seasoned crypto investor with a decade of experience under my belt, I find this recent turn of events in El Salvador intriguing. Having weathered numerous market fluctuations and regulatory changes, I can’t help but feel a sense of deja vu as governments grapple with the potential of cryptocurrencies.
As part of a $1.4 billion loan agreement with the International Monetary Fund (IMF), El Salvador has chosen to make Bitcoin acceptance by merchants optional and scale back its connection with the government-supported Chivo wallet.
Over a period of 40 months, this accord is designed to enhance the nation’s debt-to-GDP ratio and encompasses substantial modifications to the government’s approach towards Bitcoin.
As an analyst, I can share that moving forward, I won’t be compelled to deal with Bitcoin transactions in the private sector, and my public sector engagements related to Bitcoin will be restricted. The International Monetary Fund (IMF) has pointed out that these actions are designed to mitigate risks associated with Bitcoin, a decision consistent with their established policies.
Moreover, transactions will exclusively be done using U.S. dollars, the official currency of El Salvador, and the government plans to phase out its role in the Chivo digital wallet, which has witnessed minimal usage.
In 2021, El Salvador became one of the first countries to recognize Bitcoin as a legal tender, owning approximately 5,969 Bitcoins at present, valued around $602 million. However, despite the government’s efforts to promote Bitcoin usage, a recent survey has found that an overwhelming majority (92%) of Salvadoran citizens do not transact with Bitcoin.
This accord concludes a protracted series of talks and requires endorsement by the IMF’s Executive Board. Additionally, it opens up possibilities for additional funding from international bodies, with an anticipated overall financial agreement surpassing $3.5 billion.
Despite ongoing worries from the International Monetary Fund regarding Bitcoin’s speculative dangers, Max Keiser, advisor to President Nayib Bukele on Bitcoin matters, has countered the IMF’s viewpoint by labeling it as “nonsense.” He further emphasized that Bitcoin remains a choice for voluntary use within El Salvador.
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2024-12-19 10:13