Yerevan (CoinChapter.com) - El Salvador, the first country to recognize Bitcoin as legal tender, has amended its Bitcoin law following a $1.4 billion deal with the International Monetary Fund (IMF). The amendments are intended to comply with the IMF agreement, but also introduce uncertainty about the government's future Bitcoin purchases. According to Samson Mao, CEO of Jan3, the amendments create a contradiction. He said on February 13 that after the amendments, Bitcoin "is both and is not" legal tender in El Salvador.

IMF pushes El Salvador to reduce Bitcoin adoption
The original Bitcoin law, passed in September 2021, requires all businesses in El Salvador to accept Bitcoin payments. The government also made its first Bitcoin purchase that same month to encourage adoption.

The IMF has repeatedly expressed concerns about El Salvador’s Bitcoin policy, warning of the financial stability risks it could pose. In December 2024, the IMF reached a $1.4 billion loan agreement with El Salvador that required the country to restrict the use of Bitcoin. By January 2025, El Salvador’s lawmakers approved amendments to comply with the agreement.

The Changing Legal Status of Bitcoin
The revised Bitcoin law removes Bitcoin’s classification as a currency, instead defining it as “voluntary legal tender.” The change reduces Bitcoin’s role in the law to a lesser extent than the original law. Mao noted that the revisions also prohibit the use of Bitcoin to pay taxes and government fees in El Salvador. This limits the trading of Bitcoin for official purposes.

Governments face restrictions on Bitcoin purchases
The changes prevent the Salvadoran government from using public funds to buy more Bitcoin. According to Mao, the amendments stipulate that the government cannot touch Bitcoin, which raises doubts about future Bitcoin investments. Article 8 of the law also removes the state’s obligation to promote Bitcoin transactions, which could lead to the closure or sale of Chivo, a government-backed Bitcoin wallet launched in 2021.

IMF Agreement Makes Bitcoin Purchases Uncertain
Mao pointed out that there is unclear wording in the IMF agreement released on December 18, 2024. The document does not specify whether El Salvador can continue to buy Bitcoin. He mentioned that the word "restricted" in the text may have different meanings. Although the government still holds Bitcoin reserves, future purchases may be restricted. Mao also said that the law may change depending on political changes in El Salvador. He pointed out that Bitcoin adoption depends on whether people continue to use it, regardless of government policy. The IMF agreement and the new Bitcoin law introduce uncertainty to El Salvador's long-term Bitcoin strategy.