Recent developments have fundamentally altered the narrative surrounding El Salvador’s ambitious Bitcoin initiative. Throughout the year, President Nayib Bukele and the National Bitcoin Office claimed they were acquiring one Bitcoin daily, fostering a burgeoning narrative of growth and investment.
However, a startling revelation by the IMF in its July 15 report has cast significant doubt on these assertions, stating that no new Bitcoin purchases occurred since December 2024, when a $1.4 billion Extended Fund Facility was sanctioned.
Clarifying the Misleading Displays
As referenced in the IMF report, the apparent increase in Bitcoin holdings was not a result of actual acquisitions but rather from internal reallocations of government-owned assets.
This tactic inflated the balances reflected on public platforms, but they merely represented internal transactions within government wallets, devoid of any fresh spending or taxpayer involvement. Minor fluctuations within the Chivo e-wallet similarly arose from internal adjustments, negating the perception of newfound investment.
The IMF has apparently intervened, mandating El Salvador halt Bitcoin acquisitions to secure a loan in fiat currency.
As noted, they have only created the illusion of continued purchases through consolidation of existing government assets.
Source:… pic.twitter.com/46AFU1oi08
— Magoo PhD (@HodlMagoo) July 17, 2025
The Shifting Landscape of Bitcoin’s Legal Status
In a groundbreaking move in 2021, El Salvador became the first nation to designate Bitcoin as legal tender, sparking a mix of excitement and trepidation globally. However, reports indicate that under pressure from international financial institutions, the country retracted this decision in January 2025.
The government rescinded Bitcoin’s legal tender status and agreed to suspend the utilization of public funds for further acquisitions. The IMF’s latest comments affirm the validity of these undertakings.
Impending Chivo E-Wallet Regulations
Upcoming deadlines loom, with the government mandated to withdraw public-sector involvement from the Chivo e-wallet system by July 31, 2025. This pressing deadline aims to enhance fiscal transparency and ensure the Extended Fund Facility remains on course.
The government also commits to dismantling Fidebitcoin, the public Bitcoin investment trust, in a bid to restore confidence and clarity.
Concerns About Trust and Transparency
Analysts emphasize that the critical takeaway is the issue of trust. The movement of assets between wallets under the pretext of new acquisitions could tarnish the government’s reliability. This raises concerns among citizens and investors about the authenticity of future announcements.
While no additional funds were exchanged, the disparity between public statements and actual happenings has shed light on the need for more transparent data sharing practices.
The IMF acknowledged El Salvador’s adherence to certain program objectives. However, the next weeks will be pivotal in determining whether the government upholds all its commitments.
Adhering to the proposed changes regarding Chivo and Fidebitcoin could signify a new beginning for El Salvador. Conversely, failure to deliver may leave skeptics questioning the integrity of any upcoming Bitcoin-related initiatives.
Featured image from Unsplash, chart from TradingView
