El Salvador Raises Bitcoin Reserves to 7,762 BTC

El Salvador’s treasury increased the country’s bitcoin holdings to 7,762 BTC after recent purchases, government officials reported. The purchases form part of a policy that began when Congress approved a bitcoin law in September 2021.

The law made bitcoin legal tender alongside the U.S. dollar and led to state-backed measures including a national digital wallet. Officials say the accumulation is intended as a long-term reserve and to expand access to financial services and foreign investment.

The presidency reported intermittent buys timed to market dips and incentives to encourage use of the state wallet. The government lists the reported quantity as part of its sovereign reserves.

IMF staff have repeatedly warned of risks associated with holding reserves in bitcoin. The fund cited price volatility, possible contingent liabilities for the state and challenges for monetary and financial stability given El Salvador’s use of the U.S. dollar. The IMF has called for stronger risk management, clearer accounting and transparency around holdings to protect public finances.

Government officials contend that bitcoin adoption will broaden financial access for unbanked Salvadorans and attract investment in technology and tourism. Private investors and ratings agencies have raised concerns about fiscal and legal implications, which could affect borrowing costs and relations with multilateral lenders.

Market volatility has caused the dollar value of the holdings to rise and fall since 2021. The government proposed bitcoin-linked bonds to fund related projects, but those plans have not proceeded at large scale and faced scrutiny from creditors and market participants.

The national wallet’s rollout has seen uneven uptake and operational challenges, while the state continues to promote electronic payments and merchant acceptance. Since September 2021 the government has continued intermittent purchases and public promotion of bitcoin as part of a broader development agenda; international institutions and credit analysts continue to monitor the fiscal and financial implications.