Tag: loan

  • El Salvador to ‘confine’ its Bitcoin activities in $1.4bn loan deal with the IMF

    El Salvador to ‘confine’ its Bitcoin activities in $1.4bn loan deal with the IMF

    • The IMF said “potential risks” of El Salvador’s Bitcoin project will be “diminished significantly”
    • A Bitcoin podcaster questioned the true cost of the IMF’s monetary assistance to El Salvador
    • El Salvador will receive additional funding from other major banks in a financial package totaling over $3.5 billion

    El Salvador will receive a $1.4 billion loan from the International Monetary Fund (IMF) over the next 40 months as it “confines” its Bitcoin-related activities.

    The IMF is to loan the amount to the Central American country under the Extended Fund Facility (EFF) so it can support the government’s economic reforms.

    “The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies,” the IMF said in a statement.

    The IMF said that acceptance of Bitcoin by the private sector will be made voluntary while engagement in “Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”

    Taxes will only be paid in US dollars, the IMF noted, adding that El Salvador’s government participation in its Chivo crypto wallet “will be gradually unwound.”

    “Transparency, regulation, and supervision of digital assets will be enhanced to safeguard financial stability, consumer and investor protection, and financial integrity,” the IMF said.

    Juan, a Bitcoin podcaster, said on X that it’s like “watching a chess game where every move is calculated for economic recovery,” adding “yet it also raises questions about the true cost of such ‘assistance.’”

    Changing plans

    Earlier this month, it was reported that El Salvador was reducing its Bitcoin ambitious to secure the IMF loan.

    As well as making the acceptance of Bitcoin voluntary, the government would also reduce its budget deficit by 3.5% of GDP over three years through spending cuts and tax rises while boosting reserves from $11 billion to $15 billion.

    El Salvador is expected to receive additional funding support from the World Bank, the Inter-American Development Bank, and other regional development banks. In total, the overall financial package will reach over $3.5 billion.

    El Salvador began accepting Bitcoin as legal tender in 2021, making it the first to do so.

    Following El Salvador’s adoption, the IMF sent a statement in November 2021 “recommend[ing] narrowing the scope of the Bitcoin law” while “strengthening the regulation and supervision of the new payment system.”

    This was again called for in January 2022 when the IMF advised El Salvador to reconsider its decision on Bitcoin as the country’s legal tender. More recently, the IMF recommended El Salvador limit the public’s exposure to Bitcoin.



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  • El Salvador to change Bitcoin plans to secure $1.3bn IMF loan

    El Salvador to change Bitcoin plans to secure $1.3bn IMF loan

    • El Salvador would also receive $1 billion in lending from the World Bank and $1 billion from the Inter-American Development Bank
    • Under the IMF agreement, El Salvador would change a legal requirement making businesses accept Bitcoin as payment
    • Since 2021, the IMF has been against El Salvador’s Bitcoin Law, asking the government to “narrow its scope”

    El Salvador is reportedly reducing its Bitcoin ambitions as it gets ready to receive a $1.3 billion loan from the International Monetary Fund (IMF).

    The Financial Times reports that the Central American country, which was the first to accept Bitcoin as legal tender in 2021, is expected to reach a deal in the next few weeks with El Salvador’s President Nayib Bukele’s government.

    The deal is also expected to unlock a further $1 billion in lending from the World Bank and $1 billion from the Inter-American Development Bank over the next few years.

    Under the proposed plans, El Salvador would change a legal requirement making businesses accept Bitcoin as payment, making it optional instead. The government would also reduce the budget deficit by 3.5% of GDP over three years through spending cuts and tax rises while boosting reserves from $11 billion to $15 billion.

    IMF against El Salvador’s Bitcoin adoption

    Following El Salvador’s adoption of Bitcoin in 2021, the IMF sent a statement in November 2021 “recommend[ing] narrowing the scope of the Bitcoin law” while “strengthening the regulation and supervision of the new payment system.”

    This was again called for in January 2022 when the IMF advised El Salvador to reconsider its decision on Bitcoin as the country’s legal tender. More recently, the IMF recommended El Salvador limit the public’s exposure to Bitcoin.

    Despite the advisories, El Salvador and its president remain committed to Bitcoin, going on to buy more of the asset during price dips.

    With Bitcoin reaching $100,000 last week for the first time, Bukele posted a tweet on X, showcasing its Bitcoin balance was now worth more than $600 million.



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  • MicroStrategy repays Silvergate Bank loan, buy 6,455 BTC

    MicroStrategy repays Silvergate Bank loan, buy 6,455 BTC

    • MicroStrategy founder Michael Saylor announced the company had repaid the $205 million loan at a 22% discount.
    • The company also bought 6,455 bitcoins worth $150 million.
    • Saylor’s company currently holds more than 138,900 bitcoins.

    MicroStrategy, the world’s largest corporate holder of Bitcoin, has revealed it recently purchased more BTC. 

    The business intelligence company, founded by Bitcoin bull Michael Saylor, also announced on Monday that it had repaid the loan to the failed crypto-friendly bank Silvergate Bank.

    MicroStrategy repays $250 million loan, buys 6,455 BTC

    Saylor, referencing his company’s latest SEC filing, said that MicroStrategy has now fully repaid the $205 million loan it borrowed from Silvergate in March 2022. The company reportedly cleared the loan principal with a 22% discount, with Friday’s payoff seeing MicroStrategy clear the collateralized loan at $160 million.

    As a result, the company recouped its 34,619 BTC that had been pledged as collateral.

    MicroStrategy also confirmed the purchase of 6,455 BTC, acquired for a total of $150 million and at an average $23,238 a coin. Saylor’s bitcoin strategy now includes a total Bitcoin haul of 138,955 BTC since the company’s first move in 2020. 

    So far, the total BTC holdings have been acquired at a cost of $4.1 billion, with each bitcoin purchased at the average price of $29,817.

    Bitcoin currently trades around $27,809 while MicroStrategy shares closed at $256.67 on Friday and were 0.07% down at 9.10 am ET ahead of US markets opening on Monday.



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  • Core Scientific agrees $70M loan facility from B. Riley

    Core Scientific agrees $70M loan facility from B. Riley

    • Core Scientific is seeking emergency relief from the bankruptcy court for it to secure a replacement loan facility.
    • According to court documents, the miner has agreed to a $70 million credit facility from investment banking firm B. Riley.
    • The company will use the funds to pay off an existing loan to avoid defaulting,

    Core Scientific, a Bitcoin mining firm that filed for Chapter 11 bankruptcy orotection in December last year, says it’s agreed to a $70 million financing facility from B. Riley Commercial Capital, LLC.

    Court documents the Bitcoin miner filed on Tuesday reveal that the crypto company seeks to use the loan facility from the investment bank to pay off an existing debtor-in-possession (DIP) facility.

    Core Scientific seeks emergency relief

    The miner seeks an emergency relief from the bankruptcy court, which it says is needed no later than 11:30 am CET on Wednesday, 1 February, 2023. As noted in the filing, the crypto miner would be in default under the terms of the original DIP facility.

    The Core Scientific team says if approved, the first part of the facility will be $35 million before the rest follow. Securing the new credit facility from B. Riley is key to the miner continuing its operations as it navigates its bankruptcy process.

    The past year proved to be particularly brutal for crypto mining companies, with the crash in Bitcoin prices and surging energy costs combining to hurt business. Core Scientific was one of the largest miners to seek bankruptcy protection as Bitcoin price collapsed once more following crypto exchange FTX’s implosion.

    At the time of its bankruptcy filing, Core Scientific revealed liabilities of $1 billion to $10 billion.

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