Bitcoin risks are being addressed. Critical amendments to the Bitcoin Law have mitigated key risks and the authorities continue to comply with commitments not to voluntarily accumulate Bitcoin, nor issue Bitcoin-indexed/denominated debt or tokenized instruments that could create government liabilities, and work continues to secure the end participation in the government ewallet Chivo before end-July.9 However, fluctuations in Chivo clients’ deposits denominated in Bitcoin and Chivo’s liquidity management policy, which does not adjust to such fluctuations, led to minor breaches in conditionality, which have now been addressed through corrective measures (see ¶11).

Increases in Bitcoin holdings in the Strategic Bitcoin Reserve Fund reflect the consolidation of Bitcoin across various government-owned wallets.

Chivo does not adjust its Bitcoin reserves to reflect changes in clients’ Bitcoin deposits. As a result, when Chivo clients' Bitcoin holdings decrease, and Chivo does not sell the corresponding amount of Bitcoin, this leads to an increase in net public-sector holdings as defined by the TMU. Since program approval, these fluctuations have been minor and short-lived, resulting in deviations from the QPC ceiling no larger than 1 percent of total public sector Bitcoin holdings. Bitcoin holdings are monitored using (i) signed statements identifying all hot and cold wallet addresses and their corresponding Bitcoin amounts; and (ii) a monitoring tool reporting daily changes of public sector holdings net of Chivo Bitcoin deposits.