El Salvador to limit Bitcoin with $1.4b IMF deal

El Salvador has reached an agreement with the International Monetary Fund over a $1.4 billion loan package that will see the Central American nation scale back its Bitcoin program. 

The funding package will be exchanged for a reduction in the country’s domestic Bitcoin activity, subject to final approval from the IMF executive board.  

The drawdown will come from the IMF’s Extended Fund Facility, over 40 months, in support of El Salvador’s reform agenda and in particular, to assist its balance of payment needs.

As detailed by the global financial institution, further funding will be provided by the World Bank and the Inter-American Developmental Bank, as well as other sources, to take the total support package beyond $3.5b.

“The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies,” said the IMF statement.

“Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”

The IMF and the EL Salvador government have reached a staff-level agreement on a 40-month EFF arrangement to support the government's economic reforms. The agreement with