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El Salvador’s Legislative Assembly passed legislation to modify its bitcoin adoption strategy, a move aimed at fulfilling conditions of a $1.4 billion agreement with the International Monetary Fund (IMF).
The new bill, which was swiftly approved following a proposal by President Nayib Bukele, garnered 55 votes in favor and only two against. It amends the existing cryptocurrency regulations, shifting the requirement for businesses to accept bitcoin from mandatory to voluntary.
The adjustment to the bitcoin policy is part of El Salvador’s commitment to the IMF, following a deal struck last month. The agreement includes a $1.4 billion loan to aid El Salvador’s reform initiatives and alleviate balance of payments challenges. Over a 40-month period, the IMF’s fund facility is set to provide approximately $3.5 billion to the Central American nation.
In return for the financial support, the IMF required El Salvador to curb certain bitcoin-related activities, one of which is the stipulation that private sector businesses are not obligated to accept the digital currency. This condition is addressed in the bill that was recently ratified.
The IMF has emphasized the importance of transparency, regulation, and supervision concerning digital assets to ensure financial stability and protect consumers, investors, and financial integrity. These statements were made in relation to the agreement with El Salvador.
El Salvador made history in 2021 as the first country to adopt bitcoin as legal tender, a decision driven by President Bukele’s objective to enhance financial inclusion. The Bukele administration has also invested in bitcoin as a reserve asset, with current holdings of 6,049 BTC, which is valued at about $636 million based on data from Arkham Intelligence.
However, in August, President Bukele acknowledged that the adoption of bitcoin had not progressed as rapidly as anticipated, with the nationwide rollout facing several challenges.
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