El Salvador Loosens Bitcoin Mandate, Aligns with IMF Loan Conditions

El Salvador has amended its Bitcoin Law, making the acceptance of Bitcoin voluntary for merchants, a change prompted by conditions set by the International Monetary Fund (IMF) in exchange for a $1.4 billion loan. This move marks a significant shift from the previous mandate requiring businesses to accept Bitcoin, addressing concerns over the cryptocurrency's volatility and the lack of understanding among the populace, as approximately 92% of Salvadorans reportedly do not use Bitcoin. The government will also cease accepting Bitcoin for tax payments and plans to reduce its involvement in Bitcoin-related activities, including the state-sponsored Chivo wallet. Despite these regulatory changes, President Nayib Bukele's administration remains committed to Bitcoin, continuing to accumulate it as part of national reserves. The legislative reform aims to balance Bitcoin's legal tender status while improving its practical implementation within the economy. Observers note that this cautious approach reflects a growing recognition of the challenges associated with widespread Bitcoin adoption in the country.