El Salvador Amends Bitcoin Law, Makes Acceptance Optional for Merchants

El Salvador’s Legislative Assembly has recently amended its Bitcoin Law, allowing merchants to choose whether to accept Bitcoin as payment. This change is part of the country’s effort to meet the conditions set by the International Monetary Fund (IMF) for a $1.4 billion loan aimed at strengthening its economy.

A Shift in Policy

In September 2021, El Salvador made history by becoming the first country to adopt Bitcoin as legal tender, alongside the US dollar. The initiative, led by President Nayib Bukele, aimed to enhance financial inclusion and stimulate economic growth. However, the mandatory requirement for businesses to accept Bitcoin faced criticism due to the cryptocurrency’s price volatility and the population’s limited understanding of digital currencies.

“By making Bitcoin acceptance voluntary, we aim to address concerns while retaining Bitcoin’s legal status.”

Key Changes to the Bitcoin Law

The recent legislative reform includes the following key changes:

  • Merchants are no longer required to accept Bitcoin as payment.
  • The government will no longer accept Bitcoin for tax payments.
  • The government plans to reduce its involvement in Bitcoin-related activities, including scaling back the use of the state-sponsored Chivo Wallet app.

These adjustments were crucial in securing the IMF loan, which aims to stabilize El Salvador’s economy. The IMF had previously expressed concerns about El Salvador’s Bitcoin adoption, citing risks to financial stability and consumer protection.

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