How El Salvador’s IMF Deal Is Affecting Bitcoin’s Status

El Salvador, the first country to adopt Bitcoin as legal tender, has amended its Bitcoin law to comply with an agreement with the International Monetary Fund (IMF), altering its regulatory framework.

JAN3 CEO Samson Mow stated that Bitcoin “both is and isn’t legal tender” under the revised law, reflecting the complexities of the changes.

“The Bitcoin situation in El Salvador is complex, and there are many questions that still need to be answered,” he posted on X on February 13th.

Why Did El Salvador Amend Its Bitcoin Law?

El Salvador’s Bitcoin law, enacted in 2021, required businesses to accept Bitcoin as payment, and the government began acquiring Bitcoin to support adoption.

However, the IMF has consistently raised concerns about financial stability.

In December 2024, El Salvador secured a $1.4 billion loan from the IMF, contingent on scaling back Bitcoin adoption.

By January 2025, lawmakers approved amendments to comply with the agreement.

Key Changes in the Bitcoin Law

The amendments adjust Bitcoin’s legal classification, removing it as a currency while still recognizing it as “voluntary legal tender.”

The amendments to the #BitcoinLaw are very clever and allow for compliance with the IMF agreement while allowing the ES gov to save face.

TL;DR:

➡️ The Bitcoin Law still exists
➡️ ES gov can’t touch BTC anymore (except reserves?)
➡️ Bitcoin is no longer classified as…
— Samson Mow (@Excellion) February 14, 2025

They also prohibit tax payments and government fees from being settled in Bitcoin.

Additionally, article 8 states that the state is not required to facilitate Bitcoin transactions, potentially affecting the government-backed Chivo wallet.

Article 7: Basically saying the ES gov cannot touch BTC but everyone else can.

Article 8: The state doesn't need to help facilitate BTC transactions - so paving the way for a Chivo phase-out or sale.

Article 9: Related to 8. pic.twitter.com/Yhx9RSBvwa
— Samson Mow (@Excellion) February 14, 2025

Future Uncertainty

Mow pointed out uncertainties regarding whether El Salvador can continue accumulating Bitcoin, noting vague language in the IMF agreement.

While the government appears to be proceeding with Bitcoin acquisitions, future restrictions remain possible.

“Political parties in power change. Laws can be changed easily. What matters is real Bitcoin adoption - top down or grassroots, the goal is real people understanding and using Bitcoin,” Mow concluded.