TLDR
- El Salvador had to shift Bitcoin adoption to voluntary status to secure a $1.4 billion IMF loan.
- Tether and Bitfinex continue to support El Salvador’s crypto-friendly policies.
- Despite setbacks, the country keeps accumulating Bitcoin, though public adoption remains low.
- IMF concerns over Bitcoin’s volatility and El Salvador’s public finances prompted policy adjustments.
In 2025, El Salvador’s ambitious Bitcoin adoption plans—including its proposed “Bitcoin City”—faced a reality check. The country’s 2021 Bitcoin Law initially designated Bitcoin as legal tender alongside the U.S. dollar, with goals to boost financial inclusion and attract cryptocurrency businesses. However, by 2025, local uptake was slower than expected, and concerns from global bodies (notably the International Monetary Fund) led to major shifts in the nation’s Bitcoin strategy.
IMF Loan Conditional on Bitcoin Law Changes
El Salvador’s 2025 economic situation required a $1.4-billion loan from the IMF. In exchange for this funding, the IMF required the country to revise its Bitcoin policy. Under the updated terms, Bitcoin would no longer be mandatory for payments, becoming a voluntary option instead.
Additionally, the government must ensure taxes are paid in U.S. dollars rather than Bitcoin. This move was a significant concession, as it undermined the original ambition to make Bitcoin an integral part of the economy.
IMF Praises El Salvador’s Economic Progress
The IMF just acknowledged stronger-than-expected growth, projecting 4% GDP for 2025.
Key Points:
→ Economy Growing faster than expected
→ Record remittances & rising investment driving growth
→ El Salvador bought…— Crypto Patel (@CryptoPatel)
Despite the adjustment, President Nayib Bukele remained committed to Bitcoin. He continued purchasing the cryptocurrency, even though the IMF had strongly advised against further acquisitions. This ongoing accumulation raised questions about long-term benefits for ordinary Salvadorans, given the lack of public education on effective Bitcoin use.
Bitcoin Adoption Still Attracting Crypto Businesses
While on-the-ground Bitcoin adoption in El Salvador was slow, the country stayed appealing to cryptocurrency businesses. In January 2025, Tether and Bitfinex Derivatives announced plans to relocate their offices to El Salvador, citing the nation’s favorable regulatory environment and Bitcoin-literate community. This move aligned with El Salvador’s broader efforts to build a welcoming space for crypto-related enterprises.
Juan Carlos Reyes, head of the country’s Digital Assets Commission, noted that investment banks and other financial entities were also looking to set up operations there. A new Investment Banking Law allowed these institutions to handle Bitcoin and other digital assets, potentially positioning El Salvador as a crypto finance hub.
Challenges in Public Bitcoin Adoption
Even as it drew international crypto businesses, Bitcoin adoption among the general public remained low. The government’s Chivo Wallet initiative—launched with great fanfare—initially offered $30 in Bitcoin as an incentive for citizens to download and use the wallet. However, many Salvadorans simply claimed 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, general manager at My First Bitcoin, noted, the government’s continued Bitcoin accumulation without proper public engagement was unlikely to benefit most Salvadorans. Without clear education, many people struggled to see Bitcoin’s practical benefits, leading to skepticism about its value.
Global Ripple Effects of El Salvador’s Bitcoin Experiment
El Salvador’s Bitcoin experiment has impacted not just the country but also 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 creating a Bitcoin reserve, inspired by El Salvador’s crypto policies.
These developments show that while El Salvador’s Bitcoin adoption faces 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.
