IMF Confirms Advanced Talks on Future of El Salvador's Chivo Bitcoin Wallet

The International Monetary Fund (IMF) has revealed that discussions with El Salvador regarding the government-operated Chivo Bitcoin wallet are progressing significantly, with options including a potential sale or complete shutdown on the table.

Key Developments

• Negotiations over the Chivo wallet are at an advanced stage.
• These talks form part of the IMF’s second review of El Salvador’s 40-month Extended Fund Facility (EFF) program.
• El Salvador has committed to reducing public sector involvement in Bitcoin activities.

Ongoing Negotiations and Chivo’s Fate

The IMF highlighted that active negotiations are underway concerning the Chivo wallet, launched in September 2021 as part of El Salvador’s Bitcoin adoption strategy. The focus remains on exploring a sale or phased wind-down of the platform. These discussions are embedded within the broader second review of the country’s $1.3 billion Extended Fund Facility arrangement. Key priorities include improving transparency, safeguarding public finances, and minimizing risks associated with Bitcoin exposure.

(Sources: Johan Norberg)

The IMF emphasized continued close collaboration with Salvadoran officials to reach a staff-level agreement needed to finalize the review.

Bitcoin Policy Remains a Point of Contention

Bitcoin continues to be a major friction point in relations between the IMF and El Salvador. The organization has long expressed concerns over the volatility of Bitcoin prices and its potential impact on public finances, repeatedly advocating for reduced government exposure.

Earlier this year, the IMF urged El Salvador to stop accumulating Bitcoin through direct purchases and mining activities, as well as to dismantle related public mechanisms. In response, authorities agreed to curtail public sector participation as a condition of the financing program.

The latest update confirms compliance, including steps toward fully phasing out the Chivo wallet. The IMF stated: “Negotiations for the sale of the government e-wallet Chivo are well advanced, with ongoing discussions centered on enhancing transparency, protecting public resources, and mitigating associated risks.”

Notably, El Salvador’s National Bitcoin Office still posts daily acquisition updates, revealing holdings of 7,509.37 BTC—valued at over $656 million at current prices—including a purchase of 1 BTC on December 23.

Strong Economic Performance Amid Reforms

Despite the Bitcoin-related tensions, the IMF praised El Salvador’s macroeconomic progress. GDP growth is forecasted at around 4% for the current year, exceeding initial projections, with positive momentum expected to carry into the next year. Fiscal targets are being met, international reserves are increasing, and reliance on domestic borrowing has declined.

Significant structural advancements have also been made, such as new laws enhancing banking stability, implementation of Basel III standards, and strengthened anti-money laundering frameworks.

Outlook for Future Engagement

The IMF underscored that intensive dialogue with Salvadoran authorities will persist in the coming period to address remaining issues and support sustained economic stability.