The Blubber

El Salvador has reportedly revoked Bitcoin’s (BTC) status as legal tender after less than four years, following pressure from the International Monetary Fund (IMF).

According to a report from BBC, lawmakers recently approved amendments to the country’s Bitcoin Law, modifying six provisions and removing three from the 2021 legislation that made El Salvador the first nation to adopt cryptocurrency as legal tender.

The report states that the changes make Bitcoin acceptance voluntary rather than mandatory and strip the asset of its official currency status.

Economist Julia Evelin Martínez explained to BBC the significance of the revised language, noting the removal of the word "currency" while retaining the term "legal tender" in the law’s first article, which had previously caused confusion.

“The key is that the concept of currency disappears,” Martínez said. “For instance, the euro is legal tender in El Salvador because people can use it if both parties agree, but it is not an official currency because no one is obligated to accept it as payment.”

The legislative assembly passed the reforms while the government pursues a $1.4 billion funding deal with the IMF, which requires El Salvador to reduce its Bitcoin-related risks as part of the agreement.

Last year, IMF spokesperson Julie Kozack urged El Salvador to reconsider its Bitcoin policies during discussions about supporting the country’s economic reforms.

“Our recommendation has been to narrow the scope of the Bitcoin Law, strengthen the regulatory framework and oversight of the Bitcoin ecosystem, and limit the public sector’s exposure to Bitcoin,” Kozack said.