El Salvador has suspended its public-sector Bitcoin purchases following a 2024 agreement with the International Monetary Fund (IMF), marking a significant pivot for the nation that pioneered Bitcoin as legal tender in 2021. The IMF’s conditional $1.4 billion Extended Fund Facility, designed to address economic instability, mandates restrictions on new acquisitions of the cryptocurrency by the government. As of February 2025, holdings remain stable at approximately 6,244–6,246 BTC, with the IMF confirming no additional purchases since that period [1]. This contradicts recent claims by President Nayib Bukele’s administration, which reported a $948,392 Bitcoin acquisition in July 2025, underscoring a rift between official narratives [2].
The agreement also reportedly rescinded Bitcoin’s legal tender status, reducing its mandatory acceptance in transactions [1]. This shift reflects the IMF’s prioritization of fiscal discipline over experimental economic policies, aligning with its mandate to enforce debt management protocols. Critics argue the move undermines El Salvador’s initial vision of leveraging Bitcoin for economic resilience, while supporters view it as a necessary step to stabilize the country’s budget amid high inflation and external debt.
Public adoption of Bitcoin remains limited, with surveys indicating widespread skepticism due to inadequate digital infrastructure and lack of public education [3]. Usage is concentrated in pockets like Berlin, a mountain town where informal Bitcoin transactions persist [5], but broader integration into daily commerce has stagnated. The government’s continued insistence on purchasing Bitcoin, despite IMF constraints, raises questions about enforcement of the agreement and the political weight of international oversight.
The Chivo wallet, a state-backed digital platform, is now shifting toward privatization, signaling a potential recalibration of the government’s cryptocurrency strategy [1]. Central Bank President Douglas Pablo Rodríguez Fuentes emphasized the importance of transparency in public Bitcoin management, noting that “the stock of Bitcoins held by the public sector remains unchanged” [1]. This aligns with the IMF’s focus on accountability but complicates El Salvador’s ability to maintain its pioneering status in digital finance.
The situation highlights the challenges of integrating volatile assets into national fiscal frameworks. While the IMF’s intervention may provide short-term economic stability, it curtails a bold but unproven experiment in digital currency adoption. Analysts suggest the outcome could influence how other nations approach cryptocurrency initiatives, emphasizing the need for international coordination and risk mitigation strategies [4].
Reactions from financial stakeholders will be pivotal in assessing the success of these reforms. The government’s stance on Bitcoin remains contentious, with Bukele’s public advocacy clashing with IMF-imposed restrictions. As El Salvador navigates this transition, the interplay between innovation and macroeconomic stability will shape its broader financial trajectory.
Sources:
[1] [El Salvador’s Bitcoin Bet Faces Backlash Amid Economic Struggles and IMF Pressure] https://www.livebitcoinnews.com/el-salvadors-bitcoin-bet-faces-backlash-amid-economic-struggles-and-imf-pressure/
[2] [Bitcoin News Today: El Salvador Halts Bitcoin Purchases to Secure $1.4 Billion IMF Loan] https://www.ainvest.com/news/bitcoin-news-today-el-salvador-buys-948k-bitcoin-imf-claims-misreported-holdings-2507/
[3] [Bitcoin News Today: El Salvador’s Bitcoin Strategy Stalls] https://www.ainvest.com/news/bitcoin-news-today-el-salvador-bitcoin-strategy-stalls-imf-curbs-purchases-public-adoption-lags-2507/
[4] [IMF says El Salvador’s Bitcoin accumulation remains within programme limits] https://www.intellinews.com/iran-passes-controversial-fake-news-bill-amidst-free-speech-concerns-392982/?source=iran
[5] [Locals Still Use BTC in Berlin] https://m.facebook.com/manuel.guevarra.369210/photos/locals-still-use-btc-in-berlinin-the-mountain-town-of-berlin-el-salvador-locals-/729533326626545/
