IMF forgives El Salvador’s Bitcoin rule breach and releases $138M, but the buying must stop

The IMF has released about $138 million to El Salvador and waived a breach of the country’s Bitcoin rules, but the Fund is not letting the government keep buying.

Salvadoran authorities told the lender that recent Bitcoin additions came from private donations, not public spending, and the IMF now expects no further accumulation under the $1.4 billion program.

IMF grants waiver after Bitcoin rule breach

The IMF Executive Board approved an immediate disbursement of SDR 101.96 million, equivalent to roughly $138 million, after completing the latest reviews under El Salvador’s 40-month Extended Fund Facility.

The wider program, approved in February 2025, provides the country with access to approximately $1.4 billion.

The latest review identified several performance criteria that had not been met. Among them was the condition concerning Bitcoin accumulation, resulting in the Bitcoin rule breach becoming a central issue in the review.

However, the IMF said waivers were granted based on corrective measures and renewed commitments from Salvadoran authorities.

The Fund also accepted documentation showing that Bitcoin accumulated since the first review originated from private donations, with no public resources used for those additions.

The IMF has previously required El Salvador to maintain a buffer between public-sector Bitcoin holdings and the program’s accumulation ceiling after technical fluctuations involving Bitcoin deposits associated with Chivo created concerns about compliance.

El Salvador faces tighter crypto oversight

The Bitcoin rule breach is only one component of the IMF’s broader conditions for El Salvador. The lending program also calls for changes to the country’s digital-asset regulatory framework and a reduction in direct government participation in crypto-related businesses.

One major development involves Chivo, the government-linked digital wallet introduced during El Salvador’s Bitcoin rollout.

According to the IMF, majority ownership and operational control of Chivo have now been transferred to a private operator, although the government has retained some exposure.

The IMF wants that remaining involvement reduced further. Dan Katz, the Fund’s First Deputy Managing Director and chair of the board discussion, said the residual public-sector involvement should be fully unwound. Dan Katz, First Deputy Managing Director, IMF.

The Fund is also calling for stronger regulation and supervision of crypto-asset providers, improved governance of public-sector digital assets and additional transparency around government-controlled holdings.

Amendments to the Digital Asset Issuance Law are among the measures identified by the IMF.

Economic growth strengthens El Salvador’s position

The latest IMF review was not solely focused on the Bitcoin rule breach. The Fund also reported stronger-than-expected economic activity, improved liquidity and progress on fiscal and financial-sector reforms.

The IMF expects El Salvador’s economy to expand by 4.5% in 2026, following estimated growth of 3.9% in 2025. Growth is then projected at 4% in 2027.

The Fund attributed the stronger performance to investment, private consumption, remittances, tourism and capital inflows, while also pointing to improved security and investor confidence.

International reserves and liquidity conditions have also strengthened. The IMF projects gross international reserves of approximately $5.35 billion in 2026 and $6.17 billion in 2027, while the primary fiscal balance is projected to record surpluses in both years.

Nevertheless, the country still faces outstanding reform requirements. Pension and civil-service reforms have experienced delays, while fiscal management, revenue collection and expenditure controls remain areas of attention under the IMF program.

The Bitcoin rule breach was waived, but the underlying conditions governing El Salvador’s public-sector Bitcoin strategy remain in place.

What the Bitcoin rule breach means next

The Bitcoin rule breach waiver leaves El Salvador with continued obligations concerning how public authorities acquire, hold and report digital assets.

The IMF expects no additional Bitcoin accumulation beyond the documented donations under the current program. It is also seeking clearer disclosure of public-sector crypto holdings and stronger regulatory, supervisory and governance standards for digital-asset companies.

The government remains involved in the country’s crypto framework, but the lending agreement places clear limits on additional public-sector accumulation.

The Bitcoin rule breach also illustrates the importance of distinguishing between Bitcoin held by government-controlled entities, assets associated with users of state-linked services and coins acquired through private donations.

Earlier IMF documents noted that technical fluctuations involving Chivo customer deposits could affect compliance calculations even when public-sector holdings remained unchanged.

The latest waiver therefore resolves a specific compliance issue without removing the broader restrictions. El Salvador will still be expected to improve transparency, strengthen crypto regulation and reduce its remaining public-sector exposure to Bitcoin-related operations.

The $138 million disbursement provides additional financing under the IMF program, while the conditions attached to that support continue to shape the government’s approach to Bitcoin.