Five Years On, El Salvador Scales Back Bitcoin Experiment

On June 5, 2021, President Nayib Bukele announced a law making Bitcoin legal tender in El Salvador, saying it would increase financial access, reduce remittance costs and draw investment. Five years later, researchers and the International Monetary Fund report those specific outcomes did not occur and the government amended elements of the law.

Research led by Dr. Tobias Boos of the University of Vienna found that people who used Bitcoin in El Salvador were more often young, male, urban, better educated and already had bank accounts. The research concluded the policy did not produce broad adoption among previously unbanked Salvadorans. World Bank data showed 35.9% of people age 15 and older held an account in 2021, before the law took effect.

The government promoted a state-backed wallet called Chivo and offered a $30 Bitcoin sign-up credit. National Bureau of Economic Research data showed more than 60% of early Chivo users did not make a second transaction after spending their sign-up credit. By 2024, crypto wallets accounted for about 1% of remittances, down from a peak of about 1.7% in 2020–21. Remittances represented roughly 24% of El Salvador’s GDP in 2024, with about 98% of those flows originating in the United States.

Analysts note that El Salvador has used the U.S. dollar since the early 2000s, which reduced potential currency-conversion savings from switching to Bitcoin for many cross-border payments.

In December 2024 the government reached a $1.4 billion financing agreement with the IMF; the Executive Board approved the arrangement in February 2025. As part of the agreement, the government amended the Bitcoin law in January 2025 to make merchant acceptance voluntary, require taxes to be paid in U.S. dollars and limit public sector activity involving Bitcoin. Plans for proposals such as volcano-backed bonds and a Bitcoin City faced delays and did not move forward.

The IMF reported it found no evidence that the Bitcoin policy had materially expanded financial inclusion for the unbanked. The government’s public Bitcoin holdings and promotional programs were scaled back in line with the IMF conditions.

Small, local Bitcoin economies continued to operate after the national law changed. The grassroots Bitcoin Beach project in El Zonte still sees some businesses accepting Bitcoin, and individual Salvadorans have used crypto in ways reported as increasing their savings or business activity.

A visiting journalist who tested Bitcoin acceptance in a San Salvador shopping mall checked 21 shops, found four that accepted Bitcoin and completed only one smooth transaction. The journalist reported: “It’s very, very hard, borderline impossible to genuinely live on Bitcoin in El Salvador.”

The government maintained a state of emergency introduced in March 2022 to combat gangs. Official figures show the national homicide rate fell from 53.1 per 100,000 the year Bukele took office to 1.3 per 100,000 by 2025. International human rights groups have reported concerns about mass detention and reductions in judicial oversight connected to security measures.

Five years after the law was announced, official policy leaves Bitcoin available on a voluntary basis while many of the government-driven programs and proposals tied to the 2021 initiative are no longer active in the public finances or legal framework.