El Salvador: Four Years of Bitcoin as Legal Tender

El Salvador has marked the fourth anniversary of its Bitcoin legal tender law with a new acquisition, a strategic move that keeps the country’s cryptocurrency holdings in the spotlight.

Government Acquires 21 Additional BTC

According to reports from President Nayib Bukele and the country’s Bitcoin Office, the government purchased 21 BTC on Sunday, as a symbolic gesture referencing the supply cap of 21 million BTC. Official data indicates that the state has continued acquiring one BTC daily since March 2024. Based on government figures and blockchain data, El Salvador now owns 6,313 BTC.

These holdings are valued at approximately $700 million at current prices. Although small in terms of daily budget, these actions carry significant political weight.

Conflict with IMF Loan Terms

It has been revealed that these purchases conflict with a $1.4 billion loan agreement signed with the IMF in December of last year. The agreement required public entities to cease voluntary accumulation of Bitcoin and called for a freeze on additional acquisitions under the Extended Fund Facility.

As part of the agreement, the government revised the Bitcoin Law to make merchant acceptance voluntary, agreed to liquidate the Fidebitcoin trust, and planned an exit from the Chivo Wallet program.

However, the purchases have continued. This has left IMF officials and external observers wondering whether future disbursements will be granted, as compliance reviews are scheduled through 2027.

IMF Estimates and Disclosure Issues

According to an IMF report from March, the fund estimates that El Salvador has spent approximately $300 million on Bitcoin since 2021. At current market levels, these purchases represent over $400 million in unrealized gains.

However, the IMF also noted that limited disclosure around transactions and holdings makes a full independent assessment difficult.

Government disclosure of Bitcoin activity remains incomplete, even with publicly established panels. It has been pointed out that unrealized gains could be affected if market prices decline.

About Bitcoin, Security Movements, and Public Transparency

At the end of last month, the National Bitcoin Office redistributed holdings across multiple addresses, setting a limit of approximately 500 BTC per address.

Officials said the change was motivated by concerns over future quantum computing threats. The new addresses were published on a public panel, a move aimed at increasing clarity around custody.

Some market and industry observers welcome the panel. Others say the quantum argument sounds cautious and that clearer audit standards are still needed.

Bold but Divisive

Four years after adopting Bitcoin as legal tender, El Salvador’s approach continues to divide opinions. Supporters claim the country has built strong gains and remains committed to its plan, while critics warn it has created problems with international lenders.

The anniversary shows that El Salvador’s Bitcoin momentum remains seen by many as bold but also highly contested.