El Salvador Scales Back Its Bitcoin Law: Acceptance Now Voluntary
At the end of January 2025, El Salvador's parliament significantly amended the Bitcoin law passed in 2021. With 55 votes to 2, lawmakers decided that businesses no longer have to accept bitcoin. The reform was a condition of a 1.4 billion dollar loan agreement with the International Monetary Fund (IMF).
What has changed
- Voluntary acceptance: Merchants and businesses can decide for themselves whether to accept bitcoin.
- No taxes in bitcoin: Taxes and government fees can no longer be paid in bitcoin.
- Chivo wallet: The state is no longer obliged to facilitate bitcoin payments, which is expected to lead to the winding-down of the state-run Chivo wallet.
Whether bitcoin is still formally "legal tender" is disputed: the amended law no longer treats it as a currency, but it remains permitted as a voluntary means of payment.
Why the reversal?
The IMF had criticised the Bitcoin law for years because of risks to financial stability and public finances. In addition, usage remained low: many Salvadorans continued to pay mainly in U.S. dollars, which has been the official currency since 2001.
What stays the same
The government under President Nayib Bukele continues to hold bitcoin as a reserve – around 6,000 BTC at the time of the reform. Private use also remains possible: anyone who wants to can continue to pay and accept bitcoin.
Why this matters
El Salvador shows that bitcoin adoption cannot simply be decreed. Lasting use arises where people see a practical benefit – for example cheaper remittances or protection against inflation.
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