Welcome to Latam Insights Encore, a deep dive into Latin America’s most relevant economic and cryptocurrency news from the past week. This edition examines the defiant stance of El Salvador’s government on bitcoin and how Bukele will continue to push for its adoption and purchases despite the recently issued IMF deal.
Latam Insights Encore: El Salvador to Keep Pushing Bitcoin Despite IMF Agreement
El Salvador has become a major geoeconomic hotspot regarding bitcoin and how countries can adopt a Bitcoin-centric policy despite the negative stance of key economic institutions such as the International Monetary Fund (IMF). In this context, many (including myself) were negatively affected by the terms under which this pact was constructed, with the IMF placing bitcoin deterrence front and center.
While the original deal included a general winding down of the state’s bitcoin activities, it seems that the final agreement did not include a stoppage of El Salvador’s bitcoin purchases. We have witnessed an intensification of the national bitcoin accumulation effort, and now El Salvador is holding over 6,000 BTC despite the ongoing deal that would bring national coffers $1.4 billion.
Read more: El Salvador’s Bitcoin Buying Spree Continues on Christmas Day—IMF Left Watching
The sacrificial lamb of the agreement will be the Chivo wallet, the Salvadoran government’s instrument to promote bitcoin adoption by giving a BTC airdrop. However, it never reached general usage even among bitcoiners, given its limitations regarding its Lightning Network capabilities and other problems including identity theft from KYC procedures.
If this is the case, it seems like a fair trade: winding down the operations of a scarcely used wallet for $1.4 billion in a credit line and the possibility of extending it to over $3 billion to invest in balancing the country’s payments seems a positive trade for El Salvador. It also underscores the commitment of Bukele and its administration to improve the nation’s economic standing, making small sacrifices on the road to independence.
As explained in last week’s Latam Insights, there is still the possibility that this stance might disrupt the deal, given that it is still pending final approval from the IMF’s executive board. Nonetheless, given that all of this has happened with no public repercussions, it seems unlikely that this will happen.
Read more: Latam Insights Encore: El Salvador’s Confusing IMF Deal Might Be Foiled By Its Bitcoin Stance
