John Dennehy on Nostr: Good morning! We are now in DAY FIVE since El Salvador rescinded Bitcoin as legal ...
Good morning!
We are now in DAY FIVE since El Salvador rescinded Bitcoin as legal tender, at the request of the IMF
There continues to be a lot of misunderstanding about what happened on Wednesday, so it might be worth giving a brief overview
In 2021 El Salvador made history by becoming the first nation in the world to adopt Bitcoin as legal tender. The president, Nayib Bukele, aided by jack mallers (npub1cn4…3vle) announced this to much fanfare at the largest bitcoin conference in the world. In the next days the president did a sort of media tour, appearing on various twitter spaces and podcasts to champion the new law
Fast forward 3+ years
In December of 2024 El Salvador and the IMF announced a draft agreement for a loan which came with various conditions, many relating to Bitcoin in El Salvador
The way IMF loans work, the nation needs to conform to various conditions before the agreement becomes official and any payments are disbursed. The revisions passed Wednesday were sent by the president and was passed with no discussion or comment. There was no media tour, in fact there has been almost no information at all from the govt
The IMF takes away a nation’s sovereignty. The law changes passed Wednesday and other changes to come are at the behest of the IMF, so it makes sense they would not be very keen to draw attention to this, but still, the silence has been deafening. It has also created a lot of confusion
Some quick facts:
- The laws passed on Wednesday need to be published in the Official Gazette, then 90 days from that date they will become law. This is standard for El Salvador. For example, the 2021 Bitcoin Law was announced and passed in June but went into effect in September.
- No word on when the new law will be published, but likely this week.
- Once these new laws go into effect Bitcoin will cease to be legal tender in El Salvador
- The govt will no longer accept Bitcoin as payment for anything (taxes, immigration fees, etc.)
- The government Bitcoin wallet application, Chivo, will be sold
- The loan will be disbursed over a 40-month period and in that time the IMF will have deep access to anything related to the terms of the agreement and effectively have to approve any changes/ may mandate further changes from the government to conform to the terms
In addition to the above, there may be further changes related to this line in the draft agreement: For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.
Due to the lack of communication, it is pure speculation how this will be interpreted. It’s possible that the above changes will be enough to satisfy this line. It’s also possible El Salvador will be forced to make further concessions.
Hopefully the government gains its voice back and can clarify the various changes, but otherwise it will months of close observation before we can fully understand the impact
We are now in DAY FIVE since El Salvador rescinded Bitcoin as legal tender, at the request of the IMF
There continues to be a lot of misunderstanding about what happened on Wednesday, so it might be worth giving a brief overview
In 2021 El Salvador made history by becoming the first nation in the world to adopt Bitcoin as legal tender. The president, Nayib Bukele, aided by jack mallers (npub1cn4…3vle) announced this to much fanfare at the largest bitcoin conference in the world. In the next days the president did a sort of media tour, appearing on various twitter spaces and podcasts to champion the new law
Fast forward 3+ years
In December of 2024 El Salvador and the IMF announced a draft agreement for a loan which came with various conditions, many relating to Bitcoin in El Salvador
The way IMF loans work, the nation needs to conform to various conditions before the agreement becomes official and any payments are disbursed. The revisions passed Wednesday were sent by the president and was passed with no discussion or comment. There was no media tour, in fact there has been almost no information at all from the govt
The IMF takes away a nation’s sovereignty. The law changes passed Wednesday and other changes to come are at the behest of the IMF, so it makes sense they would not be very keen to draw attention to this, but still, the silence has been deafening. It has also created a lot of confusion
Some quick facts:
- The laws passed on Wednesday need to be published in the Official Gazette, then 90 days from that date they will become law. This is standard for El Salvador. For example, the 2021 Bitcoin Law was announced and passed in June but went into effect in September.
- No word on when the new law will be published, but likely this week.
- Once these new laws go into effect Bitcoin will cease to be legal tender in El Salvador
- The govt will no longer accept Bitcoin as payment for anything (taxes, immigration fees, etc.)
- The government Bitcoin wallet application, Chivo, will be sold
- The loan will be disbursed over a 40-month period and in that time the IMF will have deep access to anything related to the terms of the agreement and effectively have to approve any changes/ may mandate further changes from the government to conform to the terms
In addition to the above, there may be further changes related to this line in the draft agreement: For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.
Due to the lack of communication, it is pure speculation how this will be interpreted. It’s possible that the above changes will be enough to satisfy this line. It’s also possible El Salvador will be forced to make further concessions.
Hopefully the government gains its voice back and can clarify the various changes, but otherwise it will months of close observation before we can fully understand the impact