El Salvador has officially altered its Bitcoin adoption strategy following a $1.4 billion agreement with the International Monetary Fund (IMF). The newly approved bill, proposed by President Nayib Bukele, shifts Bitcoin acceptance for private businesses from a mandatory requirement to a voluntary choice. The proposal was swiftly approved by the legislature with 55 votes in favor and 2 against.
Key Terms of the IMF Agreement
As part of a 40-month financial support program, El Salvador must implement economic reforms while tightening crypto regulations. The IMF has emphasized the need for transparency in cryptocurrency regulations to ensure financial stability. One major adjustment is the removal of the mandatory Bitcoin acceptance policy for private businesses.
The agreement also includes consumer protection measures to safeguard investors. IMF officials stress that El Salvador must take steps to mitigate risks associated with the crypto market.
Bitcoin Adoption in El Salvador: Slow but Steady
Despite being the first country to adopt Bitcoin as legal tender in 2021, El Salvador’s adoption rate has been slower than anticipated. While the government initially promoted Bitcoin to enhance financial inclusion, Bukele recently acknowledged that adoption has not progressed as quickly as expected.
Experts attribute the slow adoption to lack of public trust in Bitcoin. Many low-income citizens prefer traditional financial methods due to complexity concerns surrounding cryptocurrencies. Additionally, the risk of Bitcoin reserves depreciating remains a significant economic concern.
Currently, the Salvadoran government holds 6,049 BTC, valued at approximately $636 million.
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