El Salvador to Keep Buying Bitcoin Despite IMF Bailout Warnings

El Salvador, the first country in the world to adopt cryptocurrency as legal tender, plans to continue purchasing Bitcoin despite warnings from the International Monetary Fund (IMF) to reduce its proportion.

El Salvador, which became the first country in the world to adopt cryptocurrency as legal tender, plans to continue purchasing Bitcoin despite warnings from the International Monetary Fund (IMF) to reduce its proportion.

According to a Reuters report on the 19th (local time), El Salvador secured a bailout of $1.4 billion (about 2.29 trillion won) from the IMF on the condition of reducing Bitcoin-related policies in the public sector.

The IMF stated that as a condition for financial support, "Bitcoin-related economic activities, transactions, and purchases in the public sector will be restricted," and "legal reforms will be made to allow the private sector to voluntarily accept Bitcoin."

A day after the IMF's announcement, the El Salvadoran government announced its intention to continue purchasing Bitcoin.

Stacy Herbert, head of the Bitcoin Office (ONBTC) under the direct control of the President of El Salvador, stated on X (formerly Twitter), "Bitcoin will remain as legal tender," and "El Salvador will continue to purchase it for strategic Bitcoin reserves."

This move is analyzed as a measure to prevent the perception that Bitcoin's status has declined in El Salvador following the IMF bailout.

Eugene Epstein, head of North American trading and structured products at Moneycorp, viewed the government's announcement of additional Bitcoin purchases as "possibly a response to negative shocks."

Under President Bukele's leadership, El Salvador became the first country in the world to adopt Bitcoin as legal tender in 2021, using the national budget to purchase Bitcoin. The El Salvadoran government refers to this as 'Strategic Bitcoin Reserves' (SBR).

The IMF has previously urged El Salvador to cancel its adoption of Bitcoin as legal tender, citing "significant risks to financial stability, fiscal soundness, consumer protection, and fiscal contingent liabilities."

El Salvador, which holds 5,968 Bitcoins, suffered a 60% loss around November 2022 due to price declines, but reportedly saw over 90% profit recently due to the 'Trump effect' causing a price surge.

Reporter Gojung Sam, Hankyung.com jsk@hankyung.com