El Salvador has revised its Bitcoin law to make its acceptance by businesses voluntary, following pressure from the International Monetary Fund (IMF).Lawmakers have approved reforms allowing merchants to opt out of accepting Bitcoin, a move influenced by the countrys pursuit of a $1.4 billion loan from the IMF.
Bitcoin was adopted as a legal tender in El Salvador in September 2021 under President Nayib Bukeles administration.This pioneering move aimed to enhance financial inclusion and attract foreign investment but has faced significant challenges.
The IMF, among others, has expressed concerns over Bitcoins volatility and the macroeconomic risks associated with its use as legal tender.Despite these hurdles, El Salvador has continued to invest in Bitcoin, recently adding to its reserves to bolster its Strategic Bitcoin Reserve.
As of early 2025, the governments total Bitcoin holdings exceed 6,055, with a value fluctuating but recently around $600 million.This ongoing investment underscores the countrys continued interest in cryptocurrency, despite the policy shift.
The amendment removes the obligation for businesses to accept Bitcoin, making its use optional.El Salvador Amends Bitcoin Law to Make Payments Optional After Four Years.
(Photo Internet reproduction)Bitcoin remains legal tender, meaning it can be used to settle debts.
This change aligns with IMF conditions for financial stability and consumer protection.El Salvadors Bitcoin ExperimentThe agreement with the IMF also stipulates that US dollars must be used exclusively for tax payments.
This further reduces the mandatory role of Bitcoin.Surveys indicated that by 2024, approximately 8% of Salvadorans used Bitcoin, while around 76% did not engage with it for transactions, highlighting low adoption rates.The initiative faced technical issues with the Chivo wallet, which was intended to facilitate Bitcoin use.
It also failed to significantly boost the economy or improve financial inclusion as initially hoped.El Salvadors experiment with Bitcoin has attracted global attention, initially increasing tourism and interest in the country.
However, the economic impact has remained limited, serving as a cautionary tale for other nations considering similar cryptocurrency integrations.The government has committed to reducing its role in the Chivo Wallet as part of the IMF deal, reflecting a cautious approach to cryptocurrency in national economies.This policy adjustment reflects broader trends in cryptocurrency adoption.
It highlights where enthusiasm meets the realities of economic stability, regulatory compliance, and international financial standards.It might signal a more measured approach by El Salvador in future financial innovations.
This could potentially influence its dialogue with international financial institutions on broader economic reforms.