The International Monetary Fund confirmed negotiations for the sale or wind-down of El Salvador's government-run Chivo Bitcoin wallet are well advanced.
The update came during the IMF's second review of El Salvador's 40-month Extended Fund Facility.
The country secured a $1.4 billion loan in 2024 after prolonged negotiations over its Bitcoin (BTC) adoption policies.
Chivo launched in September 2021 as part of El Salvador's Bitcoin rollout but faced widespread criticism including identity theft allegations, technical failures, and frozen accounts.
What Happened
The IMF said El Salvador has initiated a full phase-out of the Chivo wallet as part of commitments under the loan agreement.
Private-sector Bitcoin wallets are expected to continue operating in the country.
In March, the IMF formally asked El Salvador to halt Bitcoin accumulation through purchases and mining and dismantle public structures used to acquire the digital asset.
Despite these commitments, El Salvador continues reporting ongoing Bitcoin purchases.
The country added 1,098 BTC to national reserves last month worth approximately $100 million at the time.
El Salvador's Bitcoin Office shows the country holds approximately 7,509 BTC with purchases continuing daily.
President Nayib Bukele publicly rejected stopping purchases in March, stating the policy would continue regardless of external pressure.
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Why It Matters
The IMF has repeatedly warned that Bitcoin's price volatility poses risks to public finances and pushed for limits on government exposure.
The fund said discussions with El Salvador remain focused on transparency, protecting public funds, and reducing financial risks.
The IMF struck a positive tone on El Salvador's broader economic performance.
Real GDP growth is projected to reach around 4% this year with strong prospects for next year.
Fiscal targets remain on track, foreign reserves are increasing, and domestic borrowing has declined.
The country has advanced structural reforms including new banking stability legislation, Basel III standards adoption, and updated anti-money laundering rules.
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