El Salvador adjusts Bitcoin policies under IMF loan deal, reducing government involvement and merchant requirements, boosting financial stability.
El Salvador is making significant changes to its Bitcoin strategy as part of a $1.4 billion loan deal with the International Monetary Fund (IMF). The Central American country will receive the loan over the next 40 months. In return, El Salvador has agreed to adjust its Bitcoin policies. As pointed out by the IMF, these changes are intended to help the country lower its debt to GDP ratio.
One of the changes is that Bitcoin will not be mandatory for merchants anymore. However, the acceptance of the cryptocurrency will not be mandatory in the case of the proposed model. The government’s participation in the Chivo wallet, a platform created for Bitcoin transactions, will also be reduced. Moreover, its interaction with the Bitcoin related economic activities will be ‘restricted’, which means that the government will not encourage people to use it in public projects.
IMF Backs El Salvador Bitcoin Policy Reforms for Financial Stability
The IMF went further to state that these adjustments would greatly lower the risks that are in connection to Bitcoin. Saying it is committed to the financial stability of the Fund’s policies, the new measures are recognized as bringing El Salvador’s Bitcoin policy into the international financial regulation framework.
At the same time, El Salvador’s President Nayib Bukele has recently posted information about the Bitcoin investments of his country. There is more than $100,000 of Bitcoin in El Salvador according to Bukele. Since making Bitcoin legal tender, the country has invested approximately $270 million in the cryptocurrency, Bukele stated. But there are no sales of Bitcoins. Consequently, unrealized gains have crossed $333 million for the country.
On the same note, Argentina’s National Securities Commission (CNV) has recently entered into a cooperation with El Salvador’s Digital Asset National Commission (CNAD). The deal concerns the enhancement of the cryptocurrency laws and the enhancement of the supervision of the cryptocurrency trading platforms.
The exchange of information between both countries is to improve the management of Virtual Asset Service Providers (VASP) and legal entities in digital assets. This cooperation is a positive sign in the attempt to deal with the regulation of digital currencies in Latin America.
These dynamics describe the emerging situation of cryptocurrencies in Latin America. While El Salvador is fine-tuning its Bitcoin strategy, Argentina is in the process of beefing up its regulation. Both countries are taking important steps to navigate the challenges of cryptocurrency in their respective economies.
