Bitcoin: the salvador accused of bypassing the Rules of the IMF

In a tense economic context, the International Monetary Fund (IMF) recently plunged the Salvador for non-compliance with certain commitments related to its $ 1.4 billion financial aid program. At the heart of this controversy: the Chivo Wallet, a digital portfolio supported by the State, and management deemed opaque of Bitcoin reserves. While President Nayib Bukele defends an ambitious crypto strategy, the IMF calls for a de -escalation.

Salvador violates its Bitcoin commitments: what the latest IMF report reveals

The latest report published as part of the EFF (Extended Fund Facility) program highlights worrying differences. According to the IMF, the Salvador has not respected the objective of non-accumulation of Bitcoin: although the government has not bought new tokens since 2022, it would have consolidated existing assets by transferring them to a new Cold Wallet, offline.

The IMF Note Also that minor violations of conditionality occurred due to the fluctuations in BTC deposits in Chivo Wallet, and the absence of an adapted liquidity management policy. When users sell their bitcoins, Chivo does not liquidate the underlying cryptocurrency, which mechanically increases public assets in Bitcoin.

These differences are monitored using portfolio control tools, including surveys signed addresses “hot” And “coldFrom Chivo, as well as a daily movement detection system. The IMF indicates, however, that corrective measures have been taken to establish a safety pad and avoid new violations, especially before the scheduled sale of Chivo.

Chivo Wallet in turmoil: technical risks and liquidation in sight

Launched in 2021 to facilitate the use of bitcoin as a legal currency, the Chivo Wallet quickly became one of the symbols of the country's crypto strategy. However, it is also the subject of strong criticisms:

• Recurring technical failures;
• Cybersecurity vulnerabilities;
• Lack of transparency on transactions and public funds.

These failures of the Chivo Wallet therefore played a direct role in non-compliance with the commitments made by Salvador as part of its agreement with the IMF. In response to criticism, the authorities announced the sale or disengagement of Chivo Wallet, as well as the liquidation of FideBitcoin, a public fund created to facilitate BTC-USD exchanges. These measures aim to alleviate future risks and to get public finances out of daily crypto operations.

Bitcoin, sovereignty and strategic silence: the shadow of the Bukele plan

Since the adoption of Bitcoin as a legal currency in September 2021, Salvador has invested in cryptocurrency in a logic of financial innovation. Nayib Bukele, a fervent defender of this orientation, sees it as a lever of economic independence.

However, the yields were not up to expectations. Investments made when the BTC exceeded 40,000 dollars are today greatly discussed. The country has announced that it has made profits, but without verifiable data or independent audit, the assertion remains disputed.

Notable fact: The IMF report does not make any explicit mention of the Bitcoins accumulation program led by President Bukele. This allows its administration to continue to acquire tokens without officially triggering non-compliance within the framework of the agreement. A strategic omission that questions.

This showdown confronts the IMF with a new equation: how to supervise the use of cryptocurrencies while guaranteeing access to funding? The Salvadoran file could appear precedent for other nations considering a similar adoption, notably Argentina, which oscillates between Bitcoin and Dedollarization. The credibility of the IMF is also at stake. By targeting the Chivo Wallet and demanding more transparency, the institution tries to preserve its authority and to enforce its budgetary rules.