El Salvador’s government-backed bitcoin wallet, Chivo, will be either sold or shut down, an official announced Thursday, just a day after the nation secured a $1.4 billion loan agreement with the International Monetary Fund (IMF). This move comes as part of El Salvador’s commitment to scale back its bitcoin policies, a key condition of the IMF deal.
Stacy Herbert, director of El Salvador’s national bitcoin office, confirmed the impending change to the Chivo wallet’s status. However, she emphasized that bitcoin will remain legal tender in the country. The government, she added, will continue to purchase bitcoin, potentially accelerating its acquisition rate, for its strategic reserves.
The IMF agreement, announced Wednesday, aims to bolster El Salvador’s economy. A crucial element of the deal involves mitigating the potential risks associated with the country’s pioneering bitcoin adoption. The IMF had previously voiced concerns about El Salvador’s crypto-friendly policies, warning that they could hinder financial assistance from the institution.
“Legal reforms will make acceptance of Bitcoin by the private sector voluntary,” the IMF statement clarified. “For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.” This signals a significant shift from El Salvador’s initial approach, which mandated bitcoin acceptance alongside the US dollar.
The IMF’s executive board still needs to formally approve the loan agreement.
Despite the policy adjustments, President Nayib Bukele has previously expressed enthusiasm for bitcoin, particularly during periods of price surges. Earlier this month, he touted the appreciation of El Salvador’s bitcoin holdings and criticized his political opponents for allegedly discouraging citizens from investing in the cryptocurrency. He also celebrated bitcoin’s rally following Donald Trump’s US election victory in November, suggesting an expectation of a more favorable regulatory environment under a Trump administration compared to President Joe Biden’s.
