El Salvador, the first country to adopt Bitcoin as legal tender, has decided to scale back its ambitious cryptocurrency policy. This move comes as part of a $1.4 billion loan agreement with the International Monetary Fund (IMF), aimed at stabilizing the nation’s economy.

Since 2021, El Salvador has been at the forefront of global crypto adoption, making headlines with its controversial Bitcoin-friendly initiatives. However, the IMF had previously criticized President Nayib Bukele’s policies, citing significant risks to the country’s financial stability and raising concerns over the cryptocurrency’s volatile nature.

Under the new agreement, businesses will no longer be required to accept Bitcoin. Instead, private sector adoption of the cryptocurrency will now be voluntary. Additionally, the public sector’s involvement in Bitcoin transactions and purchases will be confined, addressing IMF concerns over the broader economic risks.

The IMF highlighted that these legal reforms significantly reduce the potential risks associated with El Salvador’s Bitcoin project, aligning it with international financial standards. The agreement still awaits final approval from the IMF’s executive board.

President Bukele, a vocal Bitcoin supporter, remains optimistic about the cryptocurrency’s role in El Salvador’s future. He recently celebrated the doubling of the nation’s Bitcoin holdings’ value, as Bitcoin prices soared past $100,000 earlier this month. Bukele attributed the rally to increased global optimism around cryptocurrencies, particularly following Donald Trump’s U.S. presidential election victory in November, which is viewed as crypto-friendly.

While Bitcoin’s meteoric rise continues to attract attention, the global market remains volatile, with recent downturns linked to signals from the U.S. Federal Reserve about a slower pace of interest rate cuts in 2025. Bitcoin is currently trading at around $100,000, maintaining its place as a major financial disruptor.