El Salvador Faces Reality Check as Bitcoin Adoption Plans Slow in 2025

TLDR

• El Salvador was forced to make Bitcoin adoption voluntary to secure a $1.4B IMF loan.
• Tether and Bitfinex still favor El Salvador’s crypto-friendly policies.
• Despite setbacks, the country continues to accumulate Bitcoin, but adoption remains low.
• IMF concerns about Bitcoin’s volatility and state finances led to policy adjustments.

In 2025, El Salvador’s ambitious Bitcoin adoption plans, including its “Bitcoin City,” faced a reality check. The country’s Bitcoin Law, passed in 2021, initially made Bitcoin legal tender alongside the U.S. dollar. This move aimed to boost financial inclusion and attract cryptocurrency businesses to the country. However, by 2025, local uptake was slower than expected, and concerns from international bodies, particularly the International Monetary Fund (IMF), led to significant adjustments in the nation’s Bitcoin strategy.

IMF Loan Conditional on Bitcoin Law Changes

El Salvador’s economic situation in 2025 required a $1.4-billion loan from the IMF. In exchange for this loan, the IMF required the country to revise its Bitcoin policy. Under the revised terms, Bitcoin would no longer be mandatory for payments, making its use voluntary.

Additionally, the government would need to ensure that taxes were paid in U.S. dollars, as opposed to Bitcoin. The move was a significant concession, as it undermined the original ambition to make Bitcoin an integral part of the economy.

Despite the adjustment, President Nayib Bukele remained committed to Bitcoin. He continued purchasing the cryptocurrency, although the IMF had strongly advised against further acquisitions. This continued accumulation raised questions about the long-term benefits for ordinary Salvadorans, as there was little public education on how to use Bitcoin effectively.

Bitcoin Adoption Still Attracting Crypto Businesses

While the on-the-ground adoption of Bitcoin in El Salvador was slow, the country remained attractive to cryptocurrency businesses. In January 2025, Tether and Bitfinex Derivatives announced that they would be moving their offices to El Salvador, citing the country’s favorable regulatory environment and Bitcoin-savvy community. This move aligned with El Salvador’s broader efforts to create a friendly space for crypto-related enterprises.

Juan Carlos Reyes, the president of the country’s Commission of Digital Assets, mentioned that investment banks and other financial entities were also looking to set up operations in the country. The introduction of a new Investment Banking Law allowed these institutions to deal with Bitcoin and other digital assets, potentially positioning El Salvador as a hub for crypto finance.

Challenges in Public Bitcoin Adoption

Despite attracting international crypto businesses, the adoption of Bitcoin by the general population remained low. The government’s Chivo Wallet initiative, launched with much fanfare, initially offered $30 in Bitcoin as an incentive for citizens to download and use the wallet. However, many Salvadorans simply took the free Bitcoin and never used the app again, indicating a lack of understanding or interest in the technology.

A key criticism was the government’s failure to invest in widespread public education about Bitcoin. As Quentin Ehrenmann, the general manager at My First Bitcoin, noted, continued Bitcoin accumulation by the government without proper public engagement was unlikely to benefit most Salvadorans. Without clear education, many people struggled to see the practical benefits of Bitcoin, which led to skepticism about its value.

Global Ripple Effects of El Salvador’s Bitcoin Experiment

El Salvador’s Bitcoin experiment has not only impacted the country but has also influenced its regional neighbors. In 2025, Bolivia’s central bank signed an agreement with El Salvador to explore cryptocurrency adoption. Additionally, Panama City’s mayor hinted at the idea of creating a Bitcoin reserve, inspired by El Salvador’s policies.

These developments show that while Bitcoin adoption in El Salvador may be facing setbacks, its influence is still growing across Latin America. The region is watching how El Salvador navigates the challenges of balancing international financial pressure with its crypto ambitions.

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