El Salvador Backs Bet on Bitcoin to Receive $1.4 Billion Loan
El Salvador has struck a $1.4bn (£1.1bn) loan deal with the International Monetary Fund (IMF) after agreeing to back its controversial Bitcoin policies.
The IMF said the risks associated with increased adoption of the world’s largest cryptocurrency are now reduced as businesses will be allowed to decide whether to accept Bitcoin.
El Salvador becomes in 2021 first country To make Bitcoin acceptance mandatory in the world.
The decision to change the policy comes just days after the cryptocurrency hit a record high of more than $108,000.
“The potential risks to the Bitcoin project will be significantly reduced by aligning with Fund policies,” the IMF announcement said.
“The legal reforms will make the acceptance of Bitcoin by the private sector voluntary. For the public sector, participation in Bitcoin-related economic activities and transactions and purchases of Bitcoin will be limited.”
The deal, which is intended to help support El Salvador’s economy, still needs to be approved by the IMF’s Executive Board.
IMF had protested Salvadoran President Nayib Bukele’s crypto-friendly policies, warning that they could hinder offers of financial aid.
Still, Mr Bukele celebrated on social media as Bitcoin surged following Donald Trump’s US election victory in November.
Earlier this month, the price of Bitcoin reached above $100,000 for the first time, Mr Bukele Said in a social media post The value of their country’s stake in the cryptocurrency has more than doubled.
He also blamed his political opponents for depriving many Salvadorans of Bitcoin’s growth.
Cryptocurrencies have surged since Donald Trump’s election victory on November 5.
The incoming Trump administration is considered far more favorable toward cryptocurrencies than President Joe Biden’s White House.
Cryptocurrencies retreated along with global stock markets on Thursday after the US Federal Reserve signaled a slow pace of interest rate cuts next year.
Bitcoin is currently trading just below $100,000.
