El Salvador has struck a $1.4bn (£1.1bn) loan deal with the International Monetary fund (IMF) after agreeing to scale back its controversial bitcoin policies.

The global lender said risks related to the adoption of the globe’s largest cryptocurrency had eased now that businesses will be allowed to decide whether or not to receive bitcoin.

In 2021, El Salvador became the first country in the globe to make bitcoin legal tender.

This week, the cryptocurrency briefly hit a fresh record high of more than $108,000.

“The potential risks of the Bitcoin assignment will be diminished significantly in line with fund policies,” the IMF announcement said.

“Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the community sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”

The deal, which is aimed to assist back El Salvador’s economy, still needs to approved by the IMF’s executive board.

The IMF had opposed the Salvadorean President Nayib Bukele’s crypto-amiable policies, warning they could become an obstacle to it offering monetary assistance.

Still, Bukele celebrated on social media as bitcoin rallied after Donald Trump’s US election win in November.

Earlier this month, as the worth of bitcoin topped $100,000 for the first period, Bukele said in a social media post that his country’s holdings in the cryptocurrency had more than doubled in worth.

He also blamed his political opponents for causing many Salvadorans to miss out on bitcoin’s rise.

The cryptocurrency has rallied since Donald Trump’s election win on the 5 November.

The incoming Trump administration is seen as being far more amiable towards cryptocurrencies than President Joe Biden’s White House.

On Thursday, the cryptocurrency retreated along with global distribute markets after the US Federal savings signalled a slower pace of yield rate cuts next year.

Bitcoin is currently buying and selling at around $100,000.