The world’s first Bitcoin nation has agreed to scale back its controversial crypto policies.
El Salvador is the first country in the world to have made Bitcoin a legal tender, having introduced it in 2021.
Now, the country has struck up a $1.4 billion loan deal after agreeing that it will dial back its controversial policies related to the cryptocurrency.
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El Salvador agreed to the deal with the International Monetary Fund (IMF) who said in an announcement: “The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies.
“Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”
The IMF had urged El Salvador to reverse its decision to make Bitcoin legal tender and was vocally against the Salvadoran president, Nayib Bukele, having some very crypto-friendly policies.
Its relationship with the country grew tense after Bukele made the crypto coin legal tender and a year later, he announced plans for the government to purchase one BTC on a daily basis.
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In a post on Facebook, Bukele had celebrated the rise in Bitcoin value after Donald Trump’s presidential win last month.
He wrote: “BITCOIN IS OVER $100,000.00! Thank goodness, our country's Bitcoin reserves are now worth 127.30% more than we pay for them, meaning an increase of more than $344 million.
“This proves, once again, that the opposition lied by instilling fear in the population about Bitcoin.”
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He went on to say: “With Bitcoin, given that its use was and will always be VOLUNTARY, although we won the vote in the Legislative Assembly and the country has made great profits in its reserves, many people missed out on those gains due to the fear that the opposition managed to sow into the population.
“Believing the opposition again, even if it seems absurd, is something that still happens, and it is something that the Government cannot avoid; that decision lies on each citizen.
“I hope they haven't listened to the opposition and are enjoying their gains, which only required confidence and patience.”
The IMF has warned the country that there are ‘large risks associated with the use of Bitcoin on financial stability, financial integrity and consumer protection’.
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The value Bitcoin hit a new record this week of over $108,000 and is currently sitting at around $100,000.