IMF grants $138M to El Salvador despite Bitcoin law
- The IMF disbursed $138 million to El Salvador while waiving penalties for its Bitcoin holdings.
- President Bukele retained 7,790 Bitcoin and moved the Chivo digital wallet to a private firm.
- River exchange restricted cash accounts while node operators faced Core Lightning security exploits.
The IMF blinked first in San Salvador.
On October 4, 2026, the International Monetary Fund cleared a $138 million disbursement for El Salvador, waiving penalties for the nation's Bitcoin legal tender law. Initial loan conditions demanded President Nayib Bukele stop buying Bitcoin and strip its legal tender status. Bukele ignored the mandate, kept El Salvador's 7,790 Bitcoin balance, and shifted operations of the state Chivo digital wallet to a private enterprise. He celebrated the payout on social media with a single kiss emoji.
Multilateral lenders are ceding ground to political persistence when traditional fiscal targets are satisfied elsewhere. By outsourcing the Chivo wallet to private hands, El Salvador created a technical buffer that allowed the IMF to process the cash without formally endorsing state crypto adoption. The concession signals a practical shift in international finance, showing that sovereign states with strong fiscal positions can defy global monetary directives without losing access to institutional funding.
While sovereign borrowers bypass international pressure, retail Bitcoin users face mounting friction from traditional financial institutions. On Stacker News Live, commentators highlighted that Bitcoin exchange River updated its cash terms for funds held through Lead Bank, introducing mandatory arbitration and stripping jury trial rights. The bank gained sweeping authority to freeze or close cash accounts without warning. Partner banks routinely flag mixed fiat and Bitcoin operations, leaving depositors to carry the risk when compliance policies tighten.
Technical risks are hitting the protocol layer at the same time. Stacker News Live reported that Core Lightning node operators running software versions 26.06.7 or earlier face immediate exploit risks from invalid penalty transaction conditions. Developer Zezabul reported losing tracking capability on 0.2 BTC after experiencing multiple suspicious channel closes. Maintainers released patches in late September to fix vulnerabilities introduced by recent features like channel splicing, but unpatched nodes remain vulnerable to automated sweeps.
Sovereigns bend international rules, while everyday users absorb the security tax.