El Salvador Isn't Buying Bitcoin With Public Money, Says the IMF

The International Monetary Fund says El Salvador has not spent a single public dollar on bitcoin since signing its $1.4 billion Extended Fund Facility in December 2024. According to the Fund, the coins that kept appearing in the government's public wallet came from private donors, not the treasury. Bitcoin Magazine reported the claim on September 5, 2026. The stakes are simple: either the world's most-watched sovereign bitcoin experiment is still running, or it was quietly suspended and the daily buy announcements are theater.

The Arithmetic of a Public Wallet

Start with what is verifiable. El Salvador's Bitcoin Office, run by Stacy Herbert, publishes a wallet address and a running balance. That balance crossed 6,000 BTC in early 2025 and has continued climbing past 6,300 BTC through 2026. President Nayib Bukele's stated policy since November 2022 has been one bitcoin per day, later described as continuing "regardless" of the IMF deal. At roughly $115,000 per coin in late 2025, a single daily purchase costs about $42 million per year. Against a national budget in the range of $9.5 billion, that is a rounding error, roughly 0.4 percent. It is also a rounding error that the IMF spent two years trying to eliminate.

The Extended Fund Facility that El Salvador signed in December 2024 came with conditions. The government agreed to make bitcoin acceptance voluntary for merchants, to unwind its position in the state-run Chivo wallet, to stop accepting bitcoin for taxes, and to confine public sector exposure. The Legislative Assembly amended the Bitcoin Law on January 29, 2025, stripping bitcoin of legal tender status in practice while leaving the branding intact. Chivo was slated for divestment. The program's first reviews passed. Money moved. The IMF disbursed tranches.

And the wallet balance kept going up.

That is the contradiction the Fund has now tried to resolve. Its answer, per this week's reporting, is that the accumulation is real but the funding is private. Donations, not appropriations. Under that reading, nobody broke the agreement. The Bitcoin Office receives gifts, records them in the public wallet, and the government's own cash never touches an exchange.

Two Readings of the Same Ledger

The charitable reading is that this is exactly what the Fund says. El Salvador has genuine bitcoin patrons. Tether relocated its headquarters to San Salvador in January 2025. Bitfinex has a presence. Max Keiser has advised Bukele since 2021. There is a real ecosystem of wealthy bitcoiners with ideological reasons to fund a national stack, and no legal barrier to donating to a sovereign state. If a foreign holder wires 30 coins to the Bitcoin Office, the balance rises, the treasury is untouched, and the IMF's compliance box stays ticked.

The skeptical reading is that this is an accounting arrangement designed to satisfy an auditor. Bitcoin is fungible. If the government moves coins between internal wallets, consolidates existing holdings, or receives coins from an entity that is state-adjacent rather than state-owned, the on-chain picture looks identical to fresh accumulation. Blockchain analysts have flagged this since 2025: several of the transactions that grew the public balance appear to be internal reshuffles rather than purchases from exchanges. Nobody can prove intent from a block explorer. That is the entire point of the ambiguity.

There is a third possibility that neither side likes to say out loud. Both readings can be true at once. The government may have genuinely stopped buying with tax revenue, and also structured its disclosure so that the appearance of continued buying survives. Bukele's political capital in Bitcoin circles is built on defiance. He posted "we will keep buying" in March 2025 while the IMF was insisting he had stopped. A leader who wins international attention by refusing to bend does not benefit from confirming that he bent.

What the Fund Actually Wanted

The IMF's objection to El Salvador's bitcoin policy was never primarily about volatility. Read the technical language in the December 2024 staff report and the concern is contingent fiscal liability. A sovereign with an $8 billion external debt load, a 2022 near-default scare, and bond yields that touched 30 percent in mid-2022 cannot afford an asset on its balance sheet that could fall 70 percent in a year and trigger a funding crisis. That is a defensible position on its own terms. The Fund is in the business of preventing balance-of-payments emergencies, and a mark-to-market swing on a leveraged sovereign is precisely the kind of thing that produces one.

The deeper objection is jurisdictional. Legal tender status for bitcoin meant that a currency the Fund cannot influence was circulating alongside the dollar in a dollarized economy. El Salvador has no central bank of its own in any meaningful sense; it abandoned the colon in 2001. So bitcoin was not competing with a domestic currency. It was competing with the Federal Reserve's product in a market where the Fed collects seigniorage and the IMF sets the terms of credit. Removing bitcoin's legal tender status restored a monopoly. It did not, by any reading of the 2021 to 2024 data, protect Salvadoran citizens from anything, because adoption was already low. A 2024 survey from Universidad Centroamericana found that roughly 92 percent of Salvadorans had not used bitcoin for transactions that year. The Chivo wallet's active user base collapsed after the initial $30 signup bonus was claimed.

That is worth sitting with. The IMF spent two years of negotiating leverage on a policy that almost nobody was using. The insistence was not about consumer protection. It was about precedent.

The Precedent That Actually Matters

If El Salvador's experiment had been about payments, it failed. Salvadorans did not switch from dollars to bitcoin for buying pupusas, and remittances through bitcoin rails peaked around 1.1 percent of the roughly $8 billion annual total. That is not a monetary revolution. It is a niche.

But the treasury holding is a different thing entirely, and it is the part that survived. El Salvador demonstrated that a small, indebted, dollarized nation can hold a reserve asset that no foreign government can freeze, dilute, or condition. That capability has nothing to do with retail adoption. It is about what happens when the terms of credit turn hostile.

Argentina under successive administrations has watched peso holdings vaporize; the currency lost more than 98 percent of its dollar value across the decade to 2025. Lebanon's depositors lost the bulk of their savings to a banking system that simply stopped honoring withdrawals in 2019. Russia discovered in February 2022 that roughly $300 billion of its central bank reserves could become unusable by administrative decision. In each case the asset held was someone else's liability. Bitcoin is the only reserve asset in existence that is nobody's liability and cannot be reassigned by a committee. That is not a trading thesis. It is a property rights thesis, and it is why the IMF's discomfort is rational rather than petty. An institution whose leverage comes from being the lender of last resort has a real interest in ensuring that borrowers have no alternative store of value outside its reach. El Salvador's 6,300 coins are worth about $725 million at current prices, less than the size of the loan facility. The number is small. The demonstration is not.

The Bond Market's Verdict

Here is the part that neither the Fund nor its critics emphasize enough: the market has already priced this and it liked what it saw.

El Salvador's 2035 bonds traded around 27 cents on the dollar in July 2022 amid genuine default expectations. By 2025 the same paper had recovered above 90 cents. Yields compressed from the high twenties to single digits. The country executed a buyback of roughly $486 million of debt in 2022 and 2023, then returned to international markets in 2024 with a $1 billion issuance. Moody's upgraded El Salvador from Caa3 to Caa1 in early 2024 and again to B3 in 2025. S&P moved it to B- with a stable outlook.

Bitcoin advocates credit the bitcoin strategy for this. That is overreach. The recovery is better explained by fiscal consolidation, the buybacks, the pension reform, and the collapse in homicide rates that made El Salvador investable again after decades of gang control. The homicide rate fell from 103 per 100,000 in 2015 to roughly 1.9 in 2024, which is a genuinely extraordinary security outcome regardless of what one thinks about the methods used to achieve it.

But the inverse claim also fails. The IMF's implied warning was that bitcoin exposure would raise El Salvador's cost of capital. It did not. Investors who were pricing default risk at 73 percent did not care about a rounding-error allocation to a volatile asset. They cared about whether the government could pay. The bitcoin position turned out to be macroeconomically irrelevant to creditors, and if it was irrelevant to creditors, the Fund's fiscal-risk argument was always weaker than the jurisdictional one it did not state.

What to Watch

Four things will settle whether this week's IMF statement is a genuine clarification or a face-saving formula.

First, wallet forensics. Chainalysis, Arkham, and independent researchers can distinguish exchange withdrawals from internal consolidations with reasonable confidence. If future balance increases trace to known exchange hot wallets rather than internal reshuffling, the donation story holds. If they trace to addresses already clustered with government-controlled holdings, it does not. Expect this to be litigated address by address over the next two quarters.

Second, the next EFF review. The program runs through 2028 with roughly $113 million disbursed per successful review. Watch whether the staff report includes a specific line item on bitcoin donations and their valuation treatment. If the Fund quantifies the donated amount, the story is real. If it stays vague, the ambiguity is deliberate on both sides.

Third, donor disclosure. A sovereign accepting anonymous transfers of hundreds of millions of dollars in bearer assets is a compliance problem, not a triumph. If El Salvador cannot name its donors, expect FATF-adjacent pressure within twelve months, and expect it to be more damaging than anything the IMF has said. This is the genuine vulnerability in the current arrangement, and Bukele's team should get ahead of it rather than treat opacity as a feature.

Fourth, imitation. The real test is whether any other sovereign follows. The Czech National Bank approved a small bitcoin test portfolio in 2025. Bhutan mines with hydropower and has accumulated a position reported in the thousands of coins. The United States established a Strategic Bitcoin Reserve by executive order in March 2025, initially from forfeited holdings. If a second IMF program country adds bitcoin to reserves before the end of 2027, El Salvador's precedent is established and the Fund's leverage on this specific question is gone. If none does, El Salvador remains an outlier that was successfully contained.

My expectation: the donation explanation is partly true and fully convenient. El Salvador almost certainly slowed or stopped treasury purchases in 2025, kept the balance rising through a mix of gifts and internal moves, and let both audiences believe what they preferred. That is not a scandal. It is a small country managing a large creditor while refusing to publicly surrender a position it built its international identity on.

The coins are still there. That was always the point.

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Source: Bitcoin Magazine