IMF advances talks with El Salvador on Bitcoin policy and Chivo wallet future

• IMF says talks with El Salvador continue, focusing on transparency, public funds protection, and Bitcoin-related risks.
• Negotiations to sell or wind down El Salvador’s Chivo Bitcoin wallet are well advanced under the IMF loan program.
• Despite IMF pressure, El Salvador continues daily Bitcoin purchases while GDP growth is projected near 4%.

The International Monetary Fund (IMF) said discussions with El Salvador over its Bitcoin-related policies remain ongoing, with a focus on improving transparency, protecting public funds, and reducing financial risks.

The update came as part of the IMF’s second review of El Salvador’s 40-month Extended Fund Facility (EFF), under which the country secured a $1.4 billion loan in 2024 after prolonged negotiations strained by its Bitcoin adoption.

According to the IMF, talks are particularly advanced regarding the future of the government-run Chivo Bitcoin wallet, including a potential sale or wind-down of the platform.

Chivo, launched in September 2021 as part of El Salvador’s Bitcoin rollout, has faced widespread criticism since its debut, including allegations of identity theft, fraud, technical failures, and frozen user accounts.

Chivo wallet under negotiation

The IMF confirmed that negotiations for the sale of the Chivo wallet are “well advanced,” marking a significant step in scaling back the government’s direct involvement in Bitcoin infrastructure.

One of the architects of the wallet said last year that the application should be shut down due to the controversy it generated since its launch.

As part of the EFF agreement, El Salvador committed to reducing public sector participation in Bitcoin-related activities.

In March, the IMF formally asked the country to halt Bitcoin accumulation through purchases and mining and to dismantle public structures used to acquire the digital asset.

The fund later said El Salvador has complied with these commitments, including initiating a full phase-out of the Chivo wallet.

Despite these steps, several private-sector Bitcoin wallets are expected to continue operating in the country.

At the time the IMF loan was agreed, Stacy Herbert, director of El Salvador’s National Bitcoin Office, said that while Chivo’s role would change, private wallet providers would continue to serve users.

Bitcoin accumulation remains a point of tension

Bitcoin policy remains a central source of friction between El Salvador and the IMF.

The fund has repeatedly warned that Bitcoin’s price volatility poses risks to public finances and has pushed for limits on government exposure.

Nevertheless, El Salvador continues to report ongoing Bitcoin purchases.

Last month, the country added 1,098 BTC to its national reserves, worth nearly $100 million at the time, according to official disclosures.

Data published by El Salvador’s Bitcoin Office shows that the country holds about 7,509 BTC, with purchases continuing on a daily basis, even during periods of high market volatility.

In May, the IMF reiterated that “efforts will continue” to ensure El Salvador does not accumulate additional Bitcoin.

President Nayib Bukele has publicly rejected the idea of stopping purchases, stating in March that the policy would continue regardless of external pressure.

IMF praises economic performance

While flagging ongoing concerns around Bitcoin, the IMF struck a positive tone on El Salvador’s broader economic performance.

The fund said the economy is expanding faster than expected, with real GDP growth projected to reach around 4% this year and strong prospects for next year.

The IMF also noted that fiscal targets remain on track, foreign reserves are increasing, and domestic borrowing has declined.

Structural reforms have advanced, including new banking stability legislation, the adoption of Basel III standards, and updated anti-money laundering rules.

The IMF said it will maintain close engagement with Salvadoran authorities as it works toward a staff-level agreement to complete the second EFF review, underscoring that Bitcoin-related risks remain under scrutiny even as the country’s macroeconomic outlook improves.

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