The International Monetary Fund (IMF) has imposed strict conditions on El Salvador’s Bitcoin strategy as part of a $1.4 billion funding arrangement, calling for an end to public sector Bitcoin purchases.

In newly released documents on March 3, the IMF set terms prohibiting “voluntary accumulation” of Bitcoin by the Salvadoran government. Additionally, the agreement bars the issuance of any debt instruments tied to Bitcoin, further restricting the country’s ability to leverage its crypto-friendly policies.

IMF executive director Méndez Bertolo stated that the financial deal is designed to strengthen governance, transparency, and resilience while minimizing Bitcoin-related risks. He noted that recent amendments to El Salvador’s Bitcoin Law have already scaled back its role as legal tender, making its acceptance voluntary and limiting tax payments to U.S. dollars.

The IMF emphasized that going forward, the government must significantly reduce its involvement in Bitcoin transactions and adhere to evolving international regulations on digital assets. The funding package is also expected to unlock additional financial support from global institutions such as the World Bank and the Inter-American Development Bank.

Despite the IMF’s growing restrictions, President Nayib Bukele remains committed to Bitcoin. On March 3, he announced a new purchase, increasing the country’s total holdings to 6,100 BTC.

The ongoing conflict between El Salvador’s Bitcoin ambitions and IMF policies highlights the tension between decentralized finance and traditional financial institutions. With the IMF tightening its grip, the future of Bitcoin’s role in the country remains uncertain.