IMF releases $139 million to El Salvador after waiving Bitcoin breach

El Salvador’s initiative to establish Bitcoin as legal tender has seen marginal adoption for payments and remittances more than five years after the Bitcoin Law took effect in 2021. While the government continues to view the cryptocurrency as a strategic asset, widespread domestic use remains limited.

In a significant development for the country's fiscal management, the International Monetary Fund (IMF) has waived a breach regarding El Salvador’s Bitcoin purchase limits. This decision has unlocked $139 million in funding under the country’s IMF-supported economic program.

The IMF had previously expressed concerns regarding Bitcoin’s volatility, risks to public finances, and potential for money laundering. While the lending agreement included conditions to constrain public sector accumulation of the cryptocurrency, the IMF opted to prioritize broader economic program objectives over mechanical enforcement of the Bitcoin-related restrictions. This move comes as El Salvador faces ongoing challenges with debt management and the need for public financing.