Bukele denies El Salvador transferred strategic bitcoin reserves

El Salvador President Nayib Bukele on Friday denied that the country had transferred its bitcoin reserves to a private operator as part of a loan agreement with the International Monetary Fund.

Bitcoin has emerged as one of the most closely watched aspects of the $1.4 billion IMF deal, given Bukele’s decision to make the cryptocurrency a central part of his economic agenda.

El Salvador became the first country in the world to adopt bitcoin as legal tender in 2021, putting the cryptocurrency into circulation alongside the U.S. dollar.

As part of negotiations with the IMF, the government removed bitcoin’s legal tender status in January.

The IMF announced a preliminary deal with El Salvador on Thursday, unlocking $140 million in fresh funding as part of an austerity and reform program.

The decision came after the IMF determined that El Salvador’s continued bitcoin purchases were being financed by private donations rather than public funds.

The IMF reported that “public participation in the Chivo wallet has been substantially unwound, and efforts are underway to enhance the transparency of Bitcoin holdings.”

“Majority ownership and operational control have been transferred to a private operator, while a minority stake and custodial responsibilities for customer assets have been retained by the government,” the organization said in a statement.