El Salvador says it will continue buying bitcoin despite IMF warning

Written by Nelson Renteria

SAN SALVADOR (Reuters) – El Salvador said on Thursday it would continue buying bitcoin, possibly at an accelerated pace, a day after the government reached a financing deal with the International Monetary Fund that said it must limit its exposure to the cryptocurrency.

Stacy Herbert, director of El Salvador’s National Bitcoin Office, wrote on X that bitcoin will remain a legal tender in the Central American country, and that the government will continue to add to its strategic reserves.

On Wednesday, El Salvador concluded a $1.4 billion loan deal with the International Monetary Fund, under which the government of President Nayib Bukele agreed to scale back its Bitcoin policies. The agreement stipulated that tax payments would only be made in the other official currency, which is the US dollar.

Planned legal reforms in El Salvador will make private sector acceptance of bitcoin voluntary, International Monetary Fund spokeswoman Julie Kozak said Thursday.

The government’s announcement that it will make more bitcoin purchases “may just be a way to counter any blowback” from the cryptocurrency’s diminishing status in El Salvador, said Eugene Epstein, head of North American trading and structured products at Moneycorp in El Salvador. New Jersey.

“Given the size of the IMF agreement and its potential terms, it might have been beneficial for (Bukele) to do so.”

El Salvador has 5,968 coins worth $594 million. Bitcoin has surged in recent days after US President-elect Donald Trump reiterated his plans to create a strategic reserve for the cryptocurrency, similar to the Strategic Oil Reserve.

In September 2021, El Salvador became the first country to make cryptocurrency a legal tender alongside the dollar. This led to friction with the International Monetary Fund, which warned of financial and legal risks that it recently said “have not materialized.”

Bukele has been touting the country’s position as a hub for cryptocurrency trading, hosting a “Bitcoin Adoption” conference last month.

The country is also home to “Bitcoin Beach,” a surfing spot aimed at tourists, where businesses have begun adopting Bitcoin as a means of payment.

(Reporting by Nelson Renteria and Rodrigo Campos; Writing by Stephanie Eschenbacher; Editing by Aida Pelez Fernandez and Rosalba O’Brien)