Key Points
- El Salvador continues to purchase Bitcoin, raising its reserves to over 6,111 BTC, despite IMF’s reservations.
- El Salvador’s commitment to Bitcoin is attracting crypto firms and setting a powerful precedent.
Despite the International Monetary Fund’s (IMF) warnings, El Salvador remains committed to Bitcoin (BTC).
On March 10, the country added another five Bitcoins to its treasury, bringing the total to over 6,111 BTC, valued at approximately $509.5 million.
El Salvador’s Bitcoin Stance
This move follows a $1.4 billion agreement with the IMF in December 2024, part of a larger $3.5 billion financial package to stabilize the country’s economy.
As part of the agreement, El Salvador agreed to keep Bitcoin usage in the private sector voluntary, reduce government involvement in crypto transactions, and continue taxing in U.S. dollars.
Despite these agreements, President Nayib Bukele’s administration continues to accumulate Bitcoin.
El Salvador’s Accumulation Spree
Since the agreement with the IMF, El Salvador has added an additional 144 BTC to its reserves.
The country typically acquires 1 BTC per day as part of President Bukele’s “Bitcoin DCA” (Dollar-Cost Averaging) strategy, but there have been instances where purchases exceeded this routine accumulation.
Even after the IMF reiterated its stance on March 3, requiring future commitments from El Salvador to limit government engagement in Bitcoin-related activities, the country continued to purchase Bitcoin.
President Bukele has made it clear that El Salvador has no plans to step away from its Bitcoin experiment.
He dismissed speculation that the country’s Bitcoin buying would cease, referencing past critics who repeatedly predicted its collapse.
El Salvador’s commitment to Bitcoin is setting a powerful precedent, attracting crypto firms to the country.
In January, Bitfinex Derivatives secured a Digital Asset Service Provider (DASP) license and relocated its operations from Seychelles to El Salvador.
Following Bitfinex’s lead, Tether (USDT), the world’s largest stablecoin, also moved its headquarters and subsidiaries to El Salvador after obtaining a local license.
El Salvador’s Digital Assets Securities Law, passed in January 2023, has laid the foundation for companies to tokenize various assets.
As a result, El Salvador is evolving into a unique crypto jurisdiction, building a financial ecosystem where digital assets can thrive.
Defying the IMF is not without consequences.
Countries that challenge the IMF’s conditions often face economic retaliation, such as currency devaluation, capital flight, and restricted access to global credit markets.
If tensions escalate, El Salvador could face stricter loan conditions, higher borrowing costs, or even funding delays.
However, if El Salvador’s strategy proves successful, the impact could be profound.
Countries struggling with weak currencies, high inflation, or limited access to global financial markets may look to El Salvador’s experiment as proof that a parallel financial system can work.
Despite the risks, El Salvador’s Bitcoin-first approach continues to draw attention, investment, and businesses.