El Salvador's Bitcoin Experiment Falls Short of Expectations

Five years after El Salvador adopted Bitcoin as legal tender, its effects on financial inclusion and lower overseas remittance costs appear limited. In June 2021, President Nayib Bukele announced the adoption of Bitcoin, stating it would improve access for people excluded from financial services and reduce remittance costs.

A study in 2025 found that Bitcoin users were concentrated among young men, urban residents, highly educated groups, and existing bank users. The World Bank reported that only 35.9 percent of El Salvador's population aged 15 and older had an account at a financial institution, making it difficult for the government-launched Chivo Bitcoin wallet to improve financial access for non-bank users.

Remittances account for about 24 percent of gross domestic product in El Salvador, but the share sent through cryptocurrency wallets rose to 1.7 percent in 2020 and 2021 before falling to below 1 percent in 2024. The government gave Chivo wallet sign-ups Bitcoin worth $30, but a U.S. National Bureau of Economic Research survey found more than 60 percent of initial users made no additional transactions after using the Bitcoin they received.

The policy ultimately retreated. El Salvador agreed to $1.4 billion in financial support with the International Monetary Fund at the end of 2024 and scaled back state intervention related to Bitcoin. In January 2025, it amended its Bitcoin law to make merchants' acceptance of Bitcoin voluntary and allow taxes to be paid only in dollars.