El Salvador Changes Bitcoin Law to Meet IMF Loan Conditions

Highlights:

• El Salvador has changed its Bitcoin law to make acceptance voluntary to meet the IMF loan conditions.
• The government still plans to continue buying Bitcoin for its national reserves.
• A court sentenced former US Senator Bob Menendez to 11 years in prison for corruption after he opposed Bitcoin in El Salvador.

In response to a deal with the International Monetary Fund, El Salvador’s Congress has approved amendments to its Bitcoin law. The lawmakers made the decision after President Nayib Bukele proposed the measure for a legislative review. The lawmakers moved fast to pass the bill, which changes the legal status of Bitcoin for businesses operating in the country. The amendment states that accepting Bitcoin is no longer mandatory; hence, businesses have additional freedom in how they take payments.

El Salvador's Congress has quickly approved legislation to amend its Bitcoin laws to comply with an agreement with the IMF to adjust its cryptocurrency exposure. The IMF asked the Bukele government to reduce its involvement in Bitcoin and make Bitcoin optional and voluntary for…

— Wu Blockchain (@WuBlockchain) January 30, 2025

The International Monetary Fund made El Salvador’s $1.4 billion loan agreement contingent on this legislative change. As part of the agreement, the IMF required El Salvador to reduce its exposure to Bitcoin and limit its mandatory use in commercial transactions. Lawmakers in the country passed the amendment with 55 votes in favor and only two against. The government of El Salvador previously required businesses to accept Bitcoin as payment. The mandate, however, did not sit well with some sectors in the country.

Businesses now have a choice to take Bitcoins or not and there is no such legal obligation for doing so. The government still recognizes Bitcoin and the US Dollar as legal tender. Government officials believe this reform will improve business efficiency and maintain the country’s pro-Bitcoin stance.

Government Reaffirms Bitcoin as Legal Tender Amid Policy Shift

The government continues to support Bitcoin as an integral part of its financial strategy despite the amended legislation. Ruling party lawmaker Elisa Rosales stated that the reform secures Bitcoin’s future in the country by ensuring its long-term viability as legal tender. She emphasized that the amendment improves its practical use without removing its legal status, which reassures both businesses and investors.

Despite the policy change, El Salvador has continued to grow its Bitcoin holdings. Recently, it added 11 BTC to its national reserves. The Bitcoin Office has stated that El Salvador is committed to increasing its Bitcoin portfolio and is aiming to purchase more Bitcoin in 2025. Officials believe Bitcoin has potential, and they hope that the strategy will succeed.

Based on current market prices, the 6,049 Bitcoin El Salvador holds is estimated to be worth $633 million. The value of its Bitcoin portfolio has increased by 127% and was made at an average purchase price of about $46,000 per Bitcoin.

Former US Senator Who Opposed Bitcoin Adoption Sentenced for Corruption

Bob Menendez, a former United States Senator who repeatedly criticized El Salvador’s decision to embrace Bitcoin as legal tender, was sentenced to 11 years in prison on corruption charges. He previously criticized the country’s Bitcoin policy as a threat to the financial system.

BREAKING: 🇺🇸 Senator Bob Menendez who fought against El Salvador adopting Bitcoin was just sentenced to 11 years in prison for taking bribes in Gold and Cash! pic.twitter.com/MT54ldrvcu

— Radar 𝘸​ Archie🚨 (@RadarHits) January 29, 2025

The court sentenced Menendez to prison on bribery and corruption charges. Investigators found evidence that he was involved in illicit financial activities involving money and gold bars. FBI agents who searched his residence found about $480,000 in cash and $150,000 worth of gold bars.