El Salvador revokes Bitcoin as legal tender status under IMF pressure. Bitcoin use is now voluntary, no longer required for businesses, institutions, or tax payments.
El Salvador’s Congress has passed a reformed Bitcoin law, officially ending Bitcoin’s status as legal tender. Government authorities approved these conditions, which came with the International Monetary Fund (IMF) as part of their $1.4 billion loan requirements. The Spanish newspaper El País reported that the Spanish government needed to finalize the changes by the end of January to secure monetary assistance.
The new legislation makes Bitcoin transactions optional instead of mandatory. The ability to utilize Bitcoin has become optional for businesses and institutions which also prohibits its usage for tax payments. President Nayib Bukele presented Bitcoin as a key element for advancing the economy. The majority of Salvadoran people did not obtain any positive economic impact. A majority of people opposed Bitcoin since its introduction according to survey results and economic conditions did not show any positive change.
El Salvador became the world’s very first nation to enact Bitcoin as legal tender when introducing it in 2021. The country became history-making by initiating the use of Bitcoin as legal tender, and it thus became the first nation to dissolve this policy. The governing political party passed an undisputed amendment to the law since it maintains its hold on the majority of Congress seats. Through his popular social media engagement, President Bukele has chosen not to express any opinion about this matter.
Bitcoin Still Legal in El Salvador, But No Longer Required
The International Monetary Fund continued to push El Salvador into reducing Bitcoin-associated dangers for about two years. The government adjusted three sections of the law by modifying them before completely erasing six other parts of the legislation. Bitcoin no longer functions as an official currency after legal amendments removed its mandatory status. The ruling party accepted these modifications under protest because accepting IMF funding was essential.
Public opinion surveys indicated that seventy-one percent of Salvadorans showed disapproval of making Bitcoin an official currency in 2021. The government allocated more than $200 million to carry out its implementation despite the opposition. The government invested these funds to create digital wallet access and build Bitcoin ATMs throughout the national borders.
The newest regulatory changes implemented by El Salvador adhere to IMF loan requirements. The legislative approvals happened swiftly because Congress is dominated by members of the New Ideas Party controlled by Bukele. Rapid action from the government was necessary to prevent delays in obtaining the loan facility.
Bitcoin retains its legal status in El Salvador, but the government no longer requires its citizens to use it. El Salvador formally declared an end to its trial of making cryptocurrency an official national currency.
