Key Insights
- The International Monetary Fund and other monetary bodies around the world have never been major fans of Bitcoin.
- These bodies have repeatedly pressured countries like El Salvador to tone down their exposure to Bitcoin.
- Recently, El Salvadorian lawmakers caved to the pressure and adjusted the nation’s Bitcoin laws to accommodate the terms of a $1.4 billion loan.
- These adjustments state that El Salvador is expected to reduce its exposure to Bitcoin.
- Moreover, the country has removed the Bitcoin acceptance mandate for companies in the private sector.
El Salvador, the first-ever country to legalize Bitcoin as legal tender, appears to be amending its initial laws.
According to reports, the central American nation has just adjusted its Bitcoin laws to align with the terms of a loan from the International Monetary Fund (IMF).
Here’s how this will affect Bitcoin in and outside the country.
Bitcoin’s Journey in El Salvador
El Salvador made history as the first country in the world to begin accepting Bitcoin within its borders as legal tender.
The country positioned the cryptocurrency alongside the US dollar, which it had legalized twenty years ago In 2001.
This bold move from the central american nation gained widespread attention from the rest of the world, and turned its president, Nayib Bukele into one of Bitcoin’s biggest bulls.However, the country’s involvement with crypto wasn’t exactly met with wide open arms from the rest of the world.
International financial institutions like the world bank and the IMF for example, have repeatedly warned of the “supposed” dangers of Bitcoin adoption on a national level, as we have seen with El Salvador.
These institutions have also repeatedly pressured the country to limit its exposure to the cryptocurrency by denying loans, amid other measures.
However, according to recent reports, the country has now approved amendments to its Bitcoin laws to align with the terms of a recent $1.4 billion loan agreement with the IMF.
These changes were proposed interestingly, by the nation’s president, Nayib Bukele and have been put in place to make sure that businesses are no longer required to accept Bitcoin.
Put simply, businesses can “choose” whether or not to accept the cryptocurrency, especially across the private sector.
The IMF Deal and Legal Reforms
According to the details of the new bill, the $1.4 billion agreement requires El Salvador to reduce its exposure to Bitcoin.
Not only this, the country is also expected to ensure that businesses are not mandated to accept the cryptocurrency.
In response to this, the country’s legislative body approved the amendment almost immediately, after the president sent it for consideration.
Reports show that the bill passed with 55 votes in favor, and only two votes against.
Elisa Rosales, the ruling party’s lawmaker described the amendment to the Bitcoin laws as “necessary to preserve Bitcoin’s status as legal tender,” while making the cryptocurrency more practical within the country.
This move also follows months of pressure from the IMF, urging the country to adopt a more cautious approach to crypto.
El Salvador’s Ongoing Bitcoin Strategy
Despite the ongoing concerns from the IMF, El Salvador continues to accumulate Bitcoin.
The country even recently bought another 11 BTC for its national reserves in December of last year.
According to the country’s official Bitcoin office, El Salvador currently holds around 6,049 BTC, which is worth around $633 million.
This portfolio has also generated a profit of around 127% with an average purchase price of $46,000 per Bitcoin:
Which means that the country is strongly in profit, even during serious price dips.
What Are The Effects Of This Move For El Salvador And the Rest Of The World?
The approval of this new Bitcoin law amendment comes amid Bitcoin’s booming popularity all over the world.
For example, the United States is seeing growing expectations of a more crypto friendly environment under the presidency of Donald Trump.
All of these factors have created new highs for the cryptocurrency with a new high of around $110,000 in sight.
The cryptocurrency now trades at around $105,000 at the time of writing, with a 2.7% price increase over the last day.
It even has a 4% price increase over the last week.
In all, El Salvador’s continued embrace of Bitcoin (even despite the hurdles) aligns with the rest of the world’s movements with crypto.
The Bitcoin bulls have remained unfazed by the new developments and have driven the cryptocurrency towards new heights.
