In the mountain town of Berlin, El Salvador, locals are using Bitcoin daily, trading goods like coffee and benefiting from its rising price. El Salvador made Bitcoin legal tender in 2021, but under a 2024 IMF deal, its use became optional and limited for government use.
El Salvador’s Bitcoin strategy is facing new challenges, says Quentin Ehrenmann of NGO My First Bitcoin. He told Reuters that after the IMF deal, Bitcoin lost its legal tender status, and the government stopped pushing public education or adoption efforts. While the government keeps adding to its Bitcoin reserves, he argues that this benefits the state more than everyday people.
The government holds over 6,249 BTC worth over $738M, but a 2024 survey showed 80% of Salvadorans feel Bitcoin has not improved their finances.
El Salvador agreed not to buy more Bitcoin under its IMF deal, according to a recent report. This clashes with statements from the country’s own Bitcoin Office, which claims BTC is still being bought daily.
The country’s Bitcoin Office confirmed on July 24 that it bought 8 more BTC worth about $948,000. This brings El Salvador’s total Bitcoin holdings worth over $740 million. However, a recent IMF statement claims that the country has not made any purchases.
The IMF claims that the country has been moving coins between wallets, and not actually buying more BTC. These internal transfers, the IMF says, create the illusion of new purchases, even though the total Bitcoin held stays the same. They also pointed out that El Salvador’s national Bitcoin wallet system doesn’t always show accurate, real-time data, adding to the confusion.
John Dennehy also called recent wallet activity “misleading,” saying it’s just internal movement dressed up as fresh buys. However, the government hasn’t replied to the IMF’s criticism, and is focused on its bigger Bitcoin goals.
El Salvador has scaled back public Bitcoin efforts to meet IMF loan terms. This shift has sparked doubts about the future of El Salvador’s Bitcoin policy.While some data shows daily 1 BTC transfers to government-linked wallets, it’s unclear if these are official purchases.
At the same time, experts note that the Bitcoin treasury strategy might be losing its edge, with fewer gains left for new buyers.
