El Salvador faces four major Bitcoin-related conditions to secure a $1.4 billion loan program from the International Monetary Fund (IMF). The requirements emerged after the IMF completed its second and third reviews, which triggered an immediate $138 million disbursement to the country.
The IMF's Four Demands
The organization is requiring El Salvador to halt state-led Bitcoin accumulation, relying instead on private donations as its sole source of Bitcoin purchases. The country must also complete the transition of the Chivo e-wallet from state control to private operation, a process already underway.
The IMF is also mandating that Bitcoin use remain voluntary for individuals and businesses, with tax payments in Bitcoin remaining prohibited. The nation has already removed state-guaranteed convertibility of Bitcoin to US dollars for merchants, eliminating the requirement for banks to maintain large cash reserves.
Additionally, the fund is demanding a public audit and full disclosure of El Salvador's digital assets to mitigate fiscal risks, along with the implementation of anti-money laundering frameworks for digital service providers.
Background and Recent Compliance
El Salvador legalized Bitcoin as legal tender in 2021. As part of IMF negotiations for the loan program, the country agreed to cease using public funds for Bitcoin purchases. However, official records showed El Salvador's Bitcoin holdings increased by over 1,000 coins, appearing to violate the accumulation restriction. El Salvador obtained a waiver by providing documentation that the additional Bitcoin came entirely from private donations.
Current Bitcoin Holdings
El Salvador's national treasury currently holds 7,789 Bitcoin. Based on the trading price at the time of reporting, this represented a value exceeding $660 million, with unrealized gains of approximately $226 million at an average cost basis of $55,718 per coin.
