El Salvador, known for its pioneering adoption of Bitcoin, has just received a significant financial boost. On Wednesday, the International Monetary Fund (IMF) executive board approved a $1.4 billion loan for the country. However, this financial lifeline comes with a condition: El Salvador must scale back its deep dive into the world of cryptocurrency.

This agreement, initially reached last December and now officially approved by the IMF board, aims to shore up El Salvador’s economy. The focus is on strengthening the nation’s public finances, improving governance, and fostering sustainable growth, all while carefully managing the potential risks associated with its ambitious “Bitcoin project.”

Nigel Clarke, the IMF’s Deputy Managing Director and Acting Chair, stated that the program is designed to, “confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of bitcoin.”

Specifically, the IMF conditions mean El Salvador will need to make Bitcoin acceptance voluntary across the board and significantly restrict “public sector engagement in Bitcoin-related activities.”

Clarke further explained, “Transparency of the public crypto e-wallet has been strengthened, and the government plans to gradually unwind its participation in the e-wallet,” signaling a move away from the government’s central role in the country’s crypto initiatives.

The IMF has been hesitant about lending to El Salvador due to its strong embrace of Bitcoin. While the Central American nation boldly made Bitcoin legal tender in 2021, it recently walked back on that stance earlier this month, indicating a shift in its crypto policy.

Remember President Nayib Bukele’s grand vision of “Bitcoin City” back in 2021? He promised a crypto-utopia, but in 2023, El Salvador’s own Ministry of Public Works admitted that the project doesn’t actually exist. Adding to the mystery, CoinDesk reporters visited the proposed location just this month and found no signs of construction, raising questions about the future of this ambitious crypto dream.

El Salvador is known for its strategy of daily Bitcoin purchases, amassing a substantial reserve of 6,090 bitcoins, currently valued at $524 million. However, between February 18 and February 24, the country paused these daily buys. They resumed on February 25, with a purchase of seven coins worth $661,000.

With yesterday’s approval, El Salvador is set to immediately receive approximately $113 million. The IMF also believes this agreement will, “catalyze additional multilateral financial support,” potentially unlocking a total financial package of $3.5 billion for El Salvador over the 40-month duration of the deal.