For IMF loan

El Salvador abolishes Bitcoin obligation again

El Salvador has abolished the obligation for merchants to accept the cryptocurrency Bitcoin as a means of payment following pressure from the International Monetary Fund (IMF). The corresponding amendment to the law was passed by parliament in the capital San Salvador on Wednesday. 

The IMF had demanded this in return for a loan of 1.4 billion dollars. In the so-called Bitcoin Act, the cryptocurrency is no longer referred to as a "currency". In addition, the law now states that natural and legal persons can accept Bitcoin as a means of payment, but are not obliged to do so. Articles stating that citizens can pay their taxes in Bitcoin and the requirement that Bitcoin can be exchanged for dollars at ATMs have also been removed.

"Most unpopular measure"
In September 2021, El Salvador became the first country in the world to introduce Bitcoin as a legal tender alongside the dollar. However, a recent survey showed that over 90% of the inhabitants of the Central American country do not use the cryptocurrency. President Nayib Bukele, who introduced the Bitcoin law, admitted that it was probably "the most unpopular measure" of his government.

The IMF was also very critical of the move. In December, Bukule's government then reached an agreement with the financial institution to mitigate the "Bitcoin-related risks" so that the 1.4 billion dollars could flow. The 40-month loan program is subject to approval by the fund's board of directors, which is expected to discuss it in February.