IMF deal to ban public sector ‘Bitcoin accumulation’ in El Salvador

The International Monetary Fund (IMF) is looking to tighten restrictions on Bitcoin purchases by El Salvador as part of an extended $1.4 billion funding arrangement with the country.

On March 3, the IMF issued a new request for an extended arrangement under its fund facility to El Salvador, filing several new documents, including a staff statement update and a statement by the executive director for El Salvador.

The technical memorandum of understanding mentioned a condition of “no voluntary accumulation of BTC by the public sector in El Salvador.”

Additionally, the memorandum requests the restriction of public sector issuance of “any type of debt or tokenized instrument that is indexed to or denominated in Bitcoin and implies a liability to the public sector.”

IMF’s Méndez Bertolo: “Bitcoin-related risks are being mitigated”

In an accompanying statement from Feb. 26, Méndez Bertolo, the fund’s executive director for El Salvador, emphasized that the IMF’s extended fund facility for El Salvador aims to provide “improvements in governance, transparency, and resilience to boost confidence and the country’s growth potential.”

“Meanwhile, Bitcoin-related risks are being mitigated,” Bertolo stated, adding:

“The authorities enacted amendments to the Bitcoin Law that clarify the legal nature of Bitcoin and remove from the law the essential features of legal tender. Acceptance of Bitcoin will be voluntary, tax payments will be made in US dollars, and the role of the public sector in the Bitcoin project will be confined.”

Bertolo mentioned that the program is expected to attract “substantial additional financial support” from the World Bank, the Inter-American Development Bank and other regional development banks.

This is a developing story, and further information will be added as it becomes available.

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