# El Salvador Reforms Bitcoin Law to Secure IMF Loan Agreement

**Published:** 2026-06-12T12:00:21.811Z  
**Topic:** El Salvador Bitcoin  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/77b41150-af82-447f-ac61-0ce7deb73dbc

El Salvador has amended its Bitcoin Law to make usage voluntary and phase out state infrastructure, meeting conditions for a $1.4 billion IMF loan.

El Salvador’s Legislative Assembly has passed significant reforms to the nation’s 2021 Bitcoin Law, effectively ending the mandatory acceptance of the digital asset by merchants [2]. The legislative changes were a core requirement for the country to secure a $1.4 billion loan agreement with the International Monetary Fund (IMF) aimed at strengthening fiscal sustainability [2].

**Key takeaways**
* The government has removed the legal requirement for businesses to accept Bitcoin, making its use entirely voluntary [2].
* The state-run Chivo Wallet infrastructure is being phased out as part of an effort to limit public sector involvement in Bitcoin activities [4].
* References to Bitcoin as legal tender have been removed from the law, and citizens can no longer use the asset to pay taxes [2].
* Despite the regulatory shift, the government continues to hold Bitcoin reserves and maintains an interest in long-term digital asset strategies [2].

## Shifting the Regulatory Framework
The recent legislative updates, approved by 55 votes in the Legislative Assembly, represent a major departure from the original 2021 framework [2]. Under the revised law, Bitcoin is no longer classified as currency, though it remains a recognized payment method exempt from capital gains tax [4]. By repealing articles that mandated Bitcoin-to-dollar convertibility and tax payments in Bitcoin, the government has moved to align its financial policies with IMF demands [2].

The IMF has long expressed concerns regarding El Salvador’s Bitcoin project, citing risks related to fiscal contingencies, consumer protection, and governance [3]. A report from the organization noted that, despite significant public spending to subsidize transaction costs, the use of Bitcoin for financial inclusion has remained minimal [3]. Recent surveys cited by local media support these findings, indicating that 92% of the population did not use Bitcoin for transactions in 2024 [2].

## Future of the Bitcoin Experiment
While the state is retreating from its role as a primary facilitator of Bitcoin infrastructure, the administration of President Nayib Bukele has signaled that it will not abandon the asset entirely [2]. The government recently expanded its Bitcoin reserves and continues to leverage the asset for debt management, having used gains from price surges to repurchase national debt [2]. 

The transition has created a sense of uncertainty among some international Bitcoin advocates who relocated to the country following the 2021 law [4]. However, the nation remains a hub for some crypto-related entities; for instance, stablecoin issuer Tether has relocated to El Salvador after securing a license [2]. As the government begins the process of unwinding the Chivo Wallet, the focus shifts to how the private sector will manage Bitcoin adoption without state-backed infrastructure [4]. The IMF board approved the loan on February 26, with an initial disbursement of approximately $113 million already authorized [4].

## Sources
1. Bitcoinmagazine — [The IMF Just Improved El Salvador’s Bitcoin Law](https://bitcoinmagazine.com/takes/the-imf-just-improved-el-salvadors-bitcoin-law)
2. BeInCrypto — [El Salvador Reforms Bitcoin Law, Scaling Back State ...](https://beincrypto.com/el-salvador-reforms-bitcoin-law-amid-imf-agreement/)
3. Imf — [El Salvador: Selected Issues - IMF](https://www.imf.org/en/publications/cr/issues/2025/03/19/el-salvador-selected-issues-565394)
4. Forbes — [El Salvador's Bitcoin Law Changes To Secure IMF Funding - ForbesEl Salvador Modifies Bitcoin Law to Secure IMF DealLawmakers in El Salvador rush new bitcoin reform after IMF ...El Salvador Rushes in New Bitcoin Law to Comply with IMF Deal](https://www.forbes.com/sites/digital-assets/2025/02/28/el-salvadors-bitcoin-law-changes-to-secure-imf-funding/)

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Cite as: TrendWatcher, "El Salvador Reforms Bitcoin Law to Secure IMF Loan Agreement", https://www.trendwatcher.in/article/77b41150-af82-447f-ac61-0ce7deb73dbc