El Salvador Downgrades Bitcoin Adoption as Businesses Are No Longer Obliged to Accept BTC

El Salvador's heralded adoption of Bitcoin as legal tender appears to be undergoing a significant downgrade as businesses are no longer obliged to accept the cryptocurrency.

El Salvador is rolling back a heralded adoption of Bitcoin as legal tender, with businesses no longer being obliged to accept the cryptocurrency, according to a report by AFP.

As part of a $1.4 billion loan with the International Monetary Fund, which began in December, the government’s involvement with the digital Chivo wallet will be “gradually unwound.”

Earlier, on January 31, El Salvador’s Legislative Assembly, in a vote of 55-2, passed modifications to the Bitcoin law, eliminating the word “currency” but keeping it legal tender. The changes will come into effect on May 1, 90 days after the legislation is published in the official newspaper.

“Bitcoin no longer has the strength of legal tender,” remarked economist Rafael Lemus to AFP. “It should have always been that way, but the government tried to force it into existence, and it didn’t work.”

Now, users are free to accept or reject Bitcoin, and it cannot be used to pay taxes or state bills.

President Nayib Bukele acknowledged that introducing Bitcoin as an official currency alongside the US dollar last September—a move making El Salvador the first country to do so—had been his government’s “most unpopular” measure, tying with stringent anti-gang security measures.

El Salvador still holds 688 Bitcoin in reserve, valued at approximately $574 million, of which $287 million is profit.

On February 13, Bukele and Microstrategy Executive Chairman Michael Saylor discussed ways to accelerate Bitcoin adoption worldwide during an interview with the president.

As reported by Bitcoin Magazine, El Salvador’s National Bitcoin Office is considering establishing nodes in each household to boost public perception of how Bitcoin can function in daily settings.

“We are still working on it, but the idea is to create an infrastructure so that every household in El Salvador can have a Bitcoin node and contribute to the network, in addition to having the possibility of mining in a decentralized way with renewable energy,” an unnamed source in the administration told the outlet.

“President Bukele continues to buy Bitcoin, we have a Bitcoin Office, we have the Bitcoin Law, Bitcoin can be used in El Salvador,” El Salvador’s ambassador to the U.S., Milena Mayorga, asserted at a Bitcoin conference.

However, Mayorga admitted that it had not been an easy road. A survey published by the Jesuit Central American University in January revealed that 92% of Salvadorans had not used Bitcoin in 2024. Of the 8% who said they had done so, the average was only 14 times a year. Family remittances via digital wallets amounted to $7.22 million in December 2024, less than 1% of the total sent.