El Salvador has signed a $1.4bn (£1.1bn) loan deal with the International Monetary Fund (IMF) after agreeing to scale back its controversial bitcoin policy.
The global financial firm said allowing businesses to decide whether to accept Bitcoin has eased the risks associated with adopting the world's largest cryptocurrency.
In 2021, El Salvador became the first country in the world to issue Bitcoin fiat currency.
This week, the cryptocurrency briefly hit an all-time high of over $108,000.
“The potential risks of Bitcoin projects will be significantly reduced in line with the Fund’s policies,” the IMF statement said.
“The legal changes will make the acceptance of Bitcoin by the private sector voluntary.The public sector will be restricted from engaging in Bitcoin-related economic activities and from trading and purchasing Bitcoin. ”
The deal is aimed at supporting El Salvador's economy, but still needs approval from the IMF's executive board.
The IMF has opposed El Salvadoran President Nayib Bukele's crypto-friendly policies, warning that they could create obstacles to providing financial support.
Still, Bukele took to social media to celebrate Bitcoin's rally following Donald Trump's victory in the US presidential election in November.
Earlier this month, when the price of Bitcoin exceeded $100,000 for the first time, Bukele said in a social media post that his country's Bitcoin holdings had more than doubled.
He also blamed his political opponents for causing many Salvadorans to miss Bitcoin's rise.
Cryptocurrencies have been on the rise since Donald Trump's election victory on November 5th.
The incoming Trump administration is seen as being much friendlier to cryptocurrencies than President Joe Biden's White House.
Cryptocurrencies fell along with global stock markets on Thursday after the US Federal Reserve signaled a slower pace of interest rate cuts next year.
Bitcoin currently trades for around $100,000.
