Despite regulatory changes, El Salvador maintains its vision of a crypto-powered economy.
Bitcoin-friendly nation El Salvador has finally bowed to pressure from the International Monetary Fund (IMF) to amend its Bitcoin law, reducing its exposure to the flagship cryptocurrency.
On January 29, Reuters reported that the country’s Legislative Assembly approved a bill proposed by President Nayib Bukele to revise Bitcoin regulations, aligning with the conditions of a $1.4 billion loan agreement with the IMF in December 2024.
Bitcoin Adoption Becomes Optional for Businesses
As part of the deal, El Salvador agreed to amend its Bitcoin laws, making the crypto asset optional for businesses rather than a mandatory form of payment.
After weeks of deliberation, President Bukele submitted the proposal to Congress, which swiftly approved it within minutes. The reform passed with 55 votes in favor and only two against. Before now, businesses were legally required to accept Bitcoin BTC $109 494 24h volatility: 1.5% Market cap: $2.18 T Vol. 24h: $60.60 B as payment.
Ruling party lawmaker Elisa Rosales explained that the amendment was necessary to ensure Bitcoin’s “permanence as legal tender” while facilitating its “practical implementation”.
Despite the legislative adjustment, El Salvador remains committed to its Bitcoin strategy. The country has continued purchasing Bitcoin even after securing the IMF loan.
Just recently, El Salvador’s Bitcoin office announced the acquisition of an additional 12 BTC, bringing its total holdings to approximately 6,049 BTC, valued at around $633 million.
According to the announcement, this represents a 127% profit since the country’s initial Bitcoin purchases.
El Salvador’s Bitcoin Journey and Global Criticism
El Salvador made history in 2021 as the first country to adopt Bitcoin as a legal tender alongside the US dollar. However, the decision faced heavy criticism from global organizations, including the World Bank, which called it a reckless move due to the crypto market’s volatility.
Despite this, El Salvador remained committed to its Bitcoin experiment, pioneering innovative use cases. The country leveraged its volcanic geothermal energy to mine Bitcoin, making it one of the first nations to incorporate renewable energy into crypto mining.
In May 2024, the government revealed it had mined 474 Bitcoin worth $29 million since 2021 using geothermal energy. According to a Reuters report, the mining operation utilized power from the Tecapa volcano, where 300 mining processors were deployed. The state-owned power plant allocated 1.5 megawatts (MW) of its 102 MW capacity to Bitcoin mining.
Beyond mining, El Salvador has continued expanding its crypto ecosystem. Shortly after adopting Bitcoin, the country launched Chivo Wallet, a government-backed digital wallet to facilitate BTC transactions.
El Salvador’s Bitcoin City Vision Gains Investment
El Salvador also plans to launch a “Bitcoin City” which already attracted international investment. Turkish holding company Yilport recently announced a $1.62 billion investment in two of El Salvador’s seaports, marking the largest private investment in the country’s history.
While El Salvador’s approach to Bitcoin remains controversial, the nation continues to forge ahead with its crypto-focused initiatives, balancing regulatory adjustments with long-term blockchain adoption.
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