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When El Salvador boldly became the first country to make Bitcoin legal tender in 2021, it captured the imagination of crypto enthusiasts around the world. President Nayib Bukele’s vision positioned the country as a global pioneer in digital finance, promising financial inclusion, innovation, and investment. But nearly four years later, that vision appears to be facing serious roadblocks.
According to new data from the Central Reserve Bank of El Salvador, just 20 out of 181 registered Bitcoin service providers are currently operational—representing a mere 11% of those listed under the country’s crypto regulatory framework. The findings raise questions about the practical effectiveness of El Salvador’s crypto policy and its long-term viability amid increasing pressure from international institutions.
A Regulatory Dream or Bureaucratic Nightmare?
El Salvador’s Bitcoin Law, passed in September 2021, required all digital asset service providers to meet a set of rigorous compliance standards, including:
- Full Anti-Money Laundering (AML) programs
- Internal audit protocols
- Cybersecurity systems adapted to the firm’s services
- Accurate and transparent accounting systems
While these requirements are aimed at fostering a secure and transparent crypto ecosystem, they have proven too burdensome for the majority of registered firms. The Central Bank’s report revealed that 89% of the companies have failed to meet basic compliance thresholds, with at least 22 providers not satisfying any of the core criteria.
These statistics suggest that the regulatory burden may be discouraging both local and international firms from launching or continuing operations within El Salvador, despite its headline-grabbing crypto-friendly stance.
Who’s Still in the Game?
Among the few companies that have managed to meet the regulatory requirements are:
- Chivo Wallet, the state-backed mobile app designed to facilitate Bitcoin transactions for citizens.
- Crypto Trading & Investment, a licensed firm focused on digital asset brokerage.
- Fintech Américas, which provides Bitcoin-related payment services.
These firms have been able to operate in full compliance with the law and are now considered the backbone of El Salvador’s operational Bitcoin service infrastructure. However, the limited number of active players is casting doubt on the country’s ability to scale its Bitcoin economy.
The IMF Factor and a Shifting Policy Landscape
El Salvador’s crypto experiment has also been complicated by its financial dealings with international institutions. In December 2024, the government struck a $1.4 billion loan agreement with the International Monetary Fund (IMF). As part of that deal, El Salvador agreed to scale back certain Bitcoin-related activities, including:
- Collecting taxes exclusively in U.S. dollars, not Bitcoin
- Limiting Bitcoin use across public institutions
- Committing to policies that would de-risk the country’s financial exposure to crypto volatility
These concessions have created tension between El Salvador’s public crypto ambitions and its financial realities. President Bukele, known for his Bitcoin advocacy, has continued to signal support for BTC, stating that the country will keep purchasing Bitcoin as part of its national reserves.
Yet, Bitcoin activist and community leader John Dennehy revealed that a “rollback law” is expected to go into effect on April 30, potentially altering Bitcoin’s legal standing or its mandated use within government functions.
This contradiction between rhetoric and policy has left both investors and citizens confused about where Bitcoin truly stands in the national framework.
Community Sentiment: Hope Turns to Hesitation
El Salvador’s early embrace of Bitcoin sparked excitement from the global crypto community. Many believed the country would become a model for emerging economies looking to leapfrog traditional banking systems. But today, sentiment is more cautious than celebratory.
- Entrepreneurs report difficulty navigating the regulatory maze.
- Investors are wary of policy inconsistency and fear sudden legal reversals.
- Citizens using Chivo Wallet have raised concerns about functionality, privacy, and limited merchant acceptance.
Meanwhile, crypto firms that once considered expanding to El Salvador are now taking a wait-and-see approach. Some have cited concerns about regulatory clarity, lack of infrastructure, and the potential impact of future IMF-driven policy shifts.
What’s Next for El Salvador’s Bitcoin Experiment?
The weeks leading up to April 30 could be crucial. If the proposed rollback law is enacted, it may:
- Rescind or revise the mandate requiring businesses to accept Bitcoin
- Clarify the legal tender status of Bitcoin for tax and public service payments
- Signal a more cautious, less aggressive stance on national crypto adoption
Alternatively, Bukele’s administration may double down on Bitcoin support, using reserve purchases and token-based funding initiatives like Bitcoin bonds and volcano mining to rekindle confidence.
Regardless of the outcome, what’s clear is that El Salvador’s Bitcoin journey is no longer just about technology—it’s about governance, economic diplomacy, and public trust.
Conclusion
El Salvador’s bold crypto experiment was always going to be a high-risk, high-reward endeavor. While the country remains an important case study for nation-state Bitcoin adoption, the current operational status of crypto firms and mounting international pressures suggest a reality far more complex than the original hype.
As regulations tighten and investor confidence wavers, El Salvador must strike a delicate balance between its digital aspirations and the financial guardrails imposed by global institutions. Whether it can do so without compromising the core ideals of Bitcoin remains to be seen.
This article reflects the opinions of the publisher based on available information at the time of writing. It is not intended to provide financial advice, and it does not necessarily represent the views of the news site or its affiliates. Readers are encouraged to conduct further research or consult with a financial advisor before making any investment decisions.
