## El Salvador's Chivo Wallet Phase-Out: What IMF Pressure Means for Bitcoin Holdings and GDP Growth

The International Monetary Fund's negotiations with El Salvador have reached a critical juncture, with the government's cryptocurrency-focused Chivo wallet facing a potential shutdown. Since President Nayib Bukele launched the digital wallet in September 2021 as a flagship Bitcoin integration project, the initiative has become increasingly controversial amid discussions over fiscal transparency and economic risk management.

### IMF Demands Reshape Crypto Policy

The IMF's second review of El Salvador's Extended Fund Facility highlights three core priorities: enhanced transparency, protection of public finances, and mitigation of Bitcoin-related volatility risks. The fund has consistently pressured the government to halt Bitcoin accumulation strategies and scale back cryptocurrency holdings in public reserves. In March 2025, El Salvador's authorities scaled back their direct involvement in state Bitcoin purchasing to align with IMF conditions, signaling a shift in approach.

The Chivo wallet represents the most visible symbol of this policy clash. As negotiations advance, discussions center on whether the government should divest from the project entirely. Officials describe talks as "well advanced," suggesting a resolution could come before the IMF finalizes its staff-level assessment.

### Bitcoin Holdings and Economic Resilience

Despite external pressure, El Salvador's Bitcoin Office continues to maintain its cryptocurrency reserves. The government currently holds approximately 7,509.37 BTC, valued at roughly $656 million based on recent market conditions. Most recently, on December 23, authorities added 1 BTC to the reserve, demonstrating continued commitment to the digital asset despite IMF negotiations.

The country's broader economic indicators suggest resilience. El Salvador's GDP growth is tracking near 4% for the current year, with momentum expected to continue into 2026. Fiscal targets have been achieved, government reserves are accumulating, and domestic debt continues to decline. These positive developments reflect broader economic reforms, including enhanced banking regulations aligned with Basel III standards and strengthened anti-money laundering protocols.

### The Volatility Question

Critics of El Salvador's approach point to Bitcoin's price volatility as a legitimate concern for public treasuries. While Bitcoin traded around $91.82K recently, historical price swings demonstrate why the IMF remains cautious about government exposure to digital assets. The fund's focus on protecting public resources from cryptocurrency market fluctuations represents a fundamental disagreement with Bukele's vision of making Bitcoin a national reserve asset.

This tension between crypto adoption and fiscal prudence reflects growing debates in the global financial system. As El Salvador negotiates with multilateral institutions, the outcome may establish precedent for how other nations approach cryptocurrency in official policy.