Pakistan establishes diplomatic ties with El Salvador, 1st to adopt Bitcoin as legal tender

Pakistan and El Salvador have formed a new bilateral partnership centered on cryptocurrency policy. Pakistan establishes diplomatic ties with El Salvador through a high-level meeting between Pakistan’s crypto envoy Bilal Bin Saqib and El Salvador’s President Nayib Bukele, focusing on shared strategies for Bitcoin adoption under IMF restrictions.

The two nations—both operating under billion-dollar IMF bailout programs—view Bitcoin as a pathway to financial sovereignty despite institutional pushback.

Why Bitcoin bonds these IMF-restricted economies

Pakistan establishes diplomatic ties with El Salvador at a critical juncture. Both countries face IMF-imposed limits on crypto policies:

• Pakistan secured a $7 billion IMF bailout in 2024 but now pushes for a strategic Bitcoin reserve and mining subsidies, drawing IMF scrutiny.

• El Salvador, the first to adopt Bitcoin as legal tender, agreed to halt further BTC purchases under its $1.4 billion IMF deal.

“This partnership is about sovereignty,” said Bilal Bin Saqib, CEO of the Pakistan Crypto Council. “Bitcoin lets us rewrite the rules of engagement with global finance.”

El Salvador’s success with Bitcoin infrastructure, like its Chivo wallet and volcano-powered mining, offers Pakistan a blueprint.

IMF’s shadow looms over crypto ambitions

The collaboration defies pressure from the International Monetary Fund, which has warned both nations against crypto-related fiscal risks.

When Pakistan establishes diplomatic ties with El Salvador, it gains access to Salvadoran expertise in navigating IMF pushback—a lifeline as Islamabad faces heat for its proposed crypto mining subsidies.

“The IMF sees crypto as a threat to monetary control,” noted financial analyst Elena Tonoyan (Geopolitical Monitor). “But these countries are betting on Bitcoin to bypass dollar dependency.”

Critics argue such moves could jeopardize IMF funding. Yet, with Pakistan eyeing mining-friendly policies and El Salvador holding 5,750 BTC ($350 million), their defiance signals a broader trend of crypto-driven economic nationalism.

The U.S. factor: Trump’s influence on Pakistan’s crypto pivot

Pakistan establishes diplomatic ties with El Salvador as part of a wider strategy influenced by global shifts. The country’s proposed “Bitcoin Reserve” mirrors efforts by the U.S. under President Trump, who has endorsed crypto as a tool for economic dominance.

“Pakistan won’t sit on the sidelines of the digital asset revolution,” Saqib stated, referencing Trump’s pro-crypto stance.

Meanwhile, El Salvador’s Bukele—fresh from reelection—has doubled down on Bitcoin despite IMF warnings. His advice to Pakistan: “Innovation requires ignoring outdated institutions.”

What’s next for the Bitcoin Alliance?

As Pakistan establishes diplomatic ties with El Salvador, observers watch for:

1. Joint crypto-mining ventures: Leveraging Pakistan’s surplus energy and El Salvador’s tech.

2. Lobbying for IMF reforms: A unified front could pressure policy changes.

3. Domestic backlash: Public skepticism persists in both nations over Bitcoin’s volatility.

“This isn’t just about technology—it’s a challenge to the global financial order,” said Tonoyan.

With the IMF unlikely to relent, the partnership tests whether Bitcoin can truly empower nations under economic strain.