El Salvador to Shutter State-Backed Bitcoin (BTC) Wallet Chivo as Part of IMF Loan Agreement

Bitcoin-friendly nation El Salvador will sunset or sell its Chivo crypto wallet as it scales back Bitcoin (BTC) activity as part of terms to secure a $1.4 billion

El Salvador will reportedly close or sell its state-backed Bitcoin (BTC) wallet Chivo as part of an agreement with the International Monetary Fund (IMF) to secure a $1.4 billion loan.

However, the decision will not affect Bitcoin's status as legal tender in the country, according to a Reuters report on March 4.

“The Chivo crypto wallet will be sunset or sold. This is part of the agreement with the IMF,” said Stacy Herbert, director of El Salvador's national Bitcoin office.

Chivo was launched in August 2024, shortly after El Salvador legalized Bitcoin. The crypto wallet played a central role in President Nayib Bukele's initiative to integrate Bitcoin into the country's financial system.

Upon signing up with Chivo, Salvadoran citizens were eligible to receive BTC rewards. However, the crypto wallet encountered difficulties, including at least two separate hacking attempts.

In April 2024, Chivo's code was leaked by hackers, who also gained access to sensitive user information. Despite these setbacks, El Salvador has maintained its strong support for Bitcoin.

Under Bukele's leadership, El Salvador became the first country to adopt Bitcoin as legal tender and began allocating state funds for Bitcoin purchases. Since legalizing BTC in September 2021, the president has overseen a $270 million investment in the trillion-dollar asset.

At the time of writing, El Salvador held over $632 million in BTC, with $362 million in unrealized gains from its Bitcoin venture. Notably, BTC's rally above $400,000 led to an improvement in El Salvador's bond markets a significant event in the crypto domain.

For the first time, BTC price movements had an impact on sovereign debt. In the wake of years of crypto skepticism, other nations such as Brazil and the United States have expressed interest in examining Bitcoin reserve laws.