El Salvador, which made history in 2021 as the first country to adopt bitcoin as legal tender, has decided to scale back its ambitious cryptocurrency plans.
The country has reached a deal with the International Monetary Fund (IMF) for a $1.4 billion loan, with the understanding that it will reduce its bitcoin-related policies.
The IMF noted that the risks associated with bitcoin adoption have lessened, especially now that businesses will have the option to choose whether or not they want to accept bitcoin as payment.
This new deal follows a period of bitcoin’s remarkable rise, with the cryptocurrency recently reaching a record high of over $108,000.
The IMF’s announcement emphasized that the private sector’s participation in bitcoin would be voluntary, while the public sector would limit its involvement in bitcoin-related transactions, including purchases of the cryptocurrency.
The loan agreement is intended to help stabilize and support El Salvador’s economy, but it still requires approval from the IMF’s executive board.
The IMF had initially expressed concerns over President Nayib Bukele’s pro-crypto stance, which had raised doubts about El Salvador’s ability to receive financial assistance.
Despite these concerns, President Bukele celebrated the rise of bitcoin, particularly following former US President Donald Trump’s election victory in November, which was seen as beneficial for cryptocurrency markets.
Earlier this month, when bitcoin surpassed the $100,000 mark for the first time, Bukele proudly announced that the country’s bitcoin holdings had more than doubled in value.
However, he also blamed his political rivals for preventing many Salvadorans from benefiting from bitcoin’s surge.
Despite its previous climb, bitcoin recently saw a dip, along with other global stock markets, after the US Federal Reserve indicated that it would slow down interest rate cuts in the coming year.
As of now, bitcoin is trading at around $100,000.
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