El Salvador has agreed a $1.4 billion (£1.1 billion) loan deal with the International Monetary Fund (IMF) after agreeing to scale back its controversial bitcoin policy.
The IMF said the risks of adopting the world's largest cryptocurrency had eased now that businesses would be allowed to decide whether to accept bitcoin.
In 2021, El Salvador became the first country in the world to mandate the acceptance of Bitcoin.
The decision to change this policy comes just days after the cryptocurrency hit an all-time high of over $108,000.
“The potential risks of the Bitcoin project will be significantly reduced in accordance with the Fund's policies,” the IMF statement said.
“Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions and purchases of Bitcoin will be limited.”
The agreement, which aims to support El Salvador's economy, must still be approved by the IMF's executive board.
The IMF had opposed Salvadoran President Nayib Bukele's pro-crypto policies, warning that they could become an obstacle to his offer of financial aid.
However, Mr. Bukele celebrated on social media the recovery of bitcoin after Donald Trump's election victory in the United States in November.
Earlier this month, as the price of bitcoin surpassed $100,000 for the first time, Bukele said in a social media post that his country's holdings in the cryptocurrency had more than doubled in value. .
He also blamed his political opponents for preventing many Salvadorans from profiting from bitcoin's rise.
The cryptocurrency has recovered since Donald Trump's election victory on November 5.
The new Trump administration is seen as much more supportive of cryptocurrencies than President Joe Biden's White House.
The cryptocurrency fell along with global stock markets on Thursday after the U.S. Federal Reserve signaled a slower pace of interest rate cuts next year.
Bitcoin is currently trading just below $100,000.
