It was considered to be a watershed moment for crypto when El Salvador adopted Bitcoin in September 2021 and it became legal tender alongside the US dollar. The legislation meant that merchants were required to accept Bitcoin for goods and services. Taxes and fees could also be paid in Bitcoin and the state-backed digital Chivo Wallet was launched to help facilitate adoption with incentives like $30 in Bitcoin for citizens who signed up.

But what has happened since then. The fact is that El Salvador’s Bitcoin experiment has shifted dramatically in the last few years and by early 2025 the government had scaled back its role by making Bitcoin voluntary rather than obligatory.

There were several notable outcomes to the decision to move to BitCoin and generally not good. Low adoption rates, despite government subsidies, saw everyday use of Bitcoin remain minimal as most Salvadorans continued to prefer the US dollar. This was understandable considering that BitCoin’s price swings created fiscal risks, especially since public funds were used to subsidise transactions. Ultmately it failed to achieve its main goal of financial inclusion for the many. The IMF noted that BitCoin adoption (as it was) did not significantly improve access to banking or financial services. On the brighter side some reports have suggested that Bitcoin adoption attracted crypto enthusiasts and investors, but even this was limited compared to expectations.

Consequently, in January 2025 Parliament removed BitCoin’s status as “currency” and eliminated mandatory acceptance. Businesses and institutions are no longer required to accept it and while it remains legal tender it became optional and can no longer be used for tax payments. This all came about as a result of pressure from the IMF in late 2024 with whom El Salvador negotiated a $1.4 billion loan with, which required scaling back BitCoin’s role. An additional consequence has been the state’s involvement in the Chivo Wallet is gradually being wound down.

The fact is that the world is not ready to adopt any cryptocurrency as “legal” tender because of its limited real-world use as most people and businesses prefer fiat for whatever reasons. Additionally, El Salvador’s experiment has shown that subsidies and Bitcoin purchases added financial pressure while causing international problems. The IMF and other institutions viewed mandatory BitCoin use as destabilising and furthermore it shed light on a whole load of governance risks: Consumer protection and transparency issues emerged around Bitcoin transactions

So, to summarise and bring us up to date, BitCoin is still legal tender but optional and the El Salvador Government is still holding BitCoin reserves, though future purchases may be reduced under IMF oversight. In the end the USD has remained dominant in daily transactions, salaries, and savings and finally (and overall) the whole crypto experiment has been scaled back. El Salvador’s “BitCoin nation” branding has softened, focusing more on voluntary use and tourism appeal.

While El Salvador’s bold BitCoin experiment started as a global first it has now been significantly curtailed with no forward plans concerning further BitCoin adoption or any indications that any other country has any other interest in doing so.

In the end El Salvador’s experiment has proven to be a basket case.

As always stay safe and well my friends.