El Salvador, under the leadership of President Nayib Bukele, continues to defy traditional economic conventions.
Bukele, known for his bold bet on Bitcoin, has maintained his strategy of accumulating the market-leading cryptocurrency, Bitcoin, despite increasing pressure from the International Monetary Fund (IMF). For experts, the decision underlines the president's firm belief in Bitcoin's potential as an economic tool, as well as an ally for financial sovereignty, technological innovation and resilience to international financial institutions.
BUY BITCOINThe IMF's new financial restrictions on El Salvador
The International Monetary Fund has repeatedly expressed concerns regarding the adoption of Bitcoin as legal tender in El Salvador. These concerns primarily center on the cryptocurrency’s inherent volatility and potential risks to the country’s financial stability. As a result, the IMF has imposed a number of financial restrictions designed to mitigate these perceived risks.
These restrictions include limiting the Salvadoran government’s exposure to Bitcoin, implementing stricter regulations for companies dealing with cryptocurrencies, and improving transparency in Bitcoin-related transactions. Additionally, the fund has recommended that El Salvador reverse its decision to grant Bitcoin legal tender status, a suggestion that the Bukele government has consistently rejected.
The impact of these restrictions has been felt on several levels. For example, there have been difficulties in obtaining international financing. Even so, the Salvadoran government has maintained its stance on Bitcoin adoption and has managed to open a path to obtaining the desired financing.
INVITE AND WINIMF calls for doxxing of state-controlled Bitcoin wallets
One of the IMF’s most controversial demands is the requirement to “doxx” Bitcoin wallets controlled by the Salvadoran state. The term “doxxing” refers to the public disclosure of personal or identifying information about an individual or organization. In this context, the IMF is seeking to have El Salvador reveal the addresses and balances of Bitcoin wallets that are under government control.
So far, it is known that The country has 6.104,1 BTC, worth approximately $527 million USD, at the time of writing. This data can be confirmed on the Mempool Space portal launched by the country’s National Bitcoin Office as part of transparency in BTC reserves. However, while the government has assured that it has been transparent in its holdings, Bukele’s statements in March 2024 about the public Bitcoin address that stores the country’s holdings suggest there is more to it. Bukele manifested that:
“We have decided to transfer a large portion of our Bitcoin to a cold wallet, and store that cold wallet in a physical vault within our national territory.”
These claims, of having transferred “a large portion of our Bitcoin,” suggest that the total amount of Bitcoin held by the country is even larger than what can be seen in the public mempool address.
BUY BITCOINMoreover, recent Bitcoin purchases by the government, despite the agreement with the IMF to reduce cryptocurrency-related activities, indicate that El Salvador remains active in the crypto market.
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Bukele's commitment is to financial innovation
Despite pressure from the IMF and criticism from various quarters, President Bukele has repeatedly reaffirmed his commitment to Bitcoin. Through his social media accounts, Bukele has regularly announced the purchase of more Bitcoin for the national reserve, taking advantage of price drops to increase the country's holdings.
Thanks to this commitment, El Salvador continues to distinguish itself worldwide as the first country to adopt Bitcoin as legal tender. It was a bold decision, implemented in September 2021, which aimed to facilitate remittances, reduce financial transaction costs, and promote financial inclusion among citizens, especially among the unbanked population.
Nayib Bukele’s decision to adopt Bitcoin as legal tender in El Salvador is therefore an unprecedented experiment that is being closely watched by the entire world. Beyond the immediate economic results, this decision has already had a significant impact on the global debate about the future of money and financial sovereignty. Bukele’s legacy, whether as a visionary or a risk-taker, is being built day by day as El Salvador navigates the waters of the crypto world.
BUY BITCOINOnly time will tell if their bet on Bitcoin will be a success. But regardless of the final outcome, the story of El Salvador and Bitcoin will be remembered as a bold and innovative chapter in the history of global finance.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
