Bitcoin No Longer Legal Tender in El Salvador, But Government Keeps Buying
El Salvador has repealed its Bitcoin Law, ending Bitcoin’s status as legal tender. While businesses no longer need to accept it, the government accumulates Bitcoin despite IMF pressure and public skepticism.
Outlines:
- Bitcoin Law Repealed After Three Years – A major policy shift.
- IMF Influence & Economic Challenges – Why the government changed course.
- Limited Adoption & Continued Investments – Low usage rates but ongoing BTC accumulation.
El Salvador’s parliament has approved a bill that eliminates Bitcoin’s legal tender status, reversing the country’s groundbreaking 2021 decision to embrace the cryptocurrency as its official currency.
The legal revisions, passed in the latter days of January, eliminate Bitcoin’s required adoption in El Salvador, making its use elective.
Businesses and public organizations are no longer compelled to accept Bitcoin as payment, which will not be used for tax purposes. Previously, the Bitcoin Law mandated Bitcoin’s acceptance nationwide.
The reform comes after nearly two years of pressure from the International Monetary Fund (IMF), which asked El Salvador to reduce Bitcoin-related financial risks in exchange for a $1.4 billion loan to help stabilize the country’s faltering economy.
Despite Repealing Bitcoin Law, Government Continues Buying Bitcoin
While Bitcoin has lost its legal cash status, El Salvador’s government continues to accumulate it.
According to Arkham Intelligence, the government currently owns almost 6,000 Bitcoins, worth around $577.38 million based on Monday’s price of $95,600.
In the last three days alone, the El Salvador government’s wallet has added seven more Bitcoins, indicating that Bukele’s administration is not abandoning its Bitcoin policy totally.
The El Salvador government asset portfolio shows a total of 6.056k BTC worth $577.38 million at $95,338.00.
Corruption Allegations Cast Shadow Over El Salvador’s Bitcoin Law
Despite President Nayib Bukele’s enthusiastic promotion of Bitcoin as a success and an opportunity to build El Salvador as a crypto hub, the bill was widely criticized. When Bitcoin was introduced as legal tender in September 2021, more than 70% of the public apparently opposed it.
Local media also reported corruption throughout the deployment, suspicions of bonus fraud, money laundering breaches, and a major $840,000 theft from government-managed Bitcoin Chivo wallets.
By 2024, just about 8% of Salvadorans reported using Bitcoin for payments, showing the cryptocurrency’s poor real-world penetration despite government attempts.
What This Means for Crypto Future
The repeal of El Salvador’s Bitcoin Law highlights the challenges of integrating cryptocurrencies into national economies. While Bitcoin is no longer legal tender, the government’s continued accumulation signals confidence in its long-term value. This move may deter other nations from rapid adoption but reinforces Bitcoin’s role as a store of value rather than a transactional currency. For investors, it underscores the volatility of regulatory environments and the importance of diversification. While short-term uncertainty may arise, Bitcoin’s resilience and growing institutional adoption suggest its influence in global finance will continue, shaping the future of digital assets despite regulatory hurdles.
