This summer, the United States made history. On July 18, Congress signed into law the GENIUS Act, the first major crypto legislation in the nation. What makes this moment remarkable is how quickly the nation’s sentiment on cryptocurrencies has shifted, especially within government. In 2013, former Federal Reserve Chairman Alan Greenspan expressed deep skepticism about Bitcoin, saying, “You really have to stretch your imagination to infer what the intrinsic value of Bitcoin is.” Today, by contrast, the sitting U.S. president is promising to make the United States the “crypto capital of the planet.”
This shift is not only visible in the United States. In 2024, the European Union implemented the Markets in Crypto-Assets (MiCA) framework, establishing rules for stablecoins, disclosures, and market practices across all member countries. These new legislative efforts represent a legitimization of cryptocurrencies in major economies around the world. Cryptocurrencies are no longer fringe, they are being integrated into the legal and financial infrastructure of the world’s largest economies.
But years before these efforts to regulate and integrate crypto, El Salvador made a far more radical move. In 2021, it became the first country in the world to adopt Bitcoin as legal tender. By 2024, however, this experiment was significantly scaled back through a $1.4 billion loan agreement with the International Monetary Fund (IMF), which included provisions that revoked Bitcoin’s official status for tax payments and made its use by businesses voluntary. As crypto becomes a serious policy issue for major nations, what lessons can be drawn from El Salvador’s high-risk, low-readiness experiment?
The Lead Up
El Salvador’s young and bold president, Nayib Bukele, saw Bitcoin as a tool to modernize the economy and expand financial access. At the time, over 70 percent of Salvadorans lacked access to traditional banking services. Bitcoin was pitched as a solution to this gap, offering digital wallets and financial tools to those excluded from the banking system.
Another motivation was to lower remittance costs. In 2021, approximately 22 percent of El Salvador’s GDP came from remittances, largely sent from the United States. Bitcoin was seen as a way to reduce transfer fees, speed up transactions, and keep more money in the hands of recipients.
Beyond solving existing problems, Bukele envisioned building a tech-forward economy. He announced plans for Bitcoin City, a futuristic, tax-free city powered by geothermal energy from the Conchagua volcano. The city would attract foreign investment, support crypto startups, and issue “volcano bonds” to finance its development.
What Went Wrong?
The law was relatively easy to pass. Bukele’s party and its allies held a supermajority in the Legislative Assembly. The legislation was sweeping: all economic agents, unless lacking the necessary technology, were required to accept Bitcoin. Taxes could be paid in Bitcoin, and government subsidies were distributed in the cryptocurrency.
To support its rollout, the government introduced Chivo, a digital wallet app designed to make Bitcoin transactions accessible for everyday use. As an incentive, citizens who downloaded the app received $30 worth of Bitcoin. The government also installed hundreds of Bitcoin ATMs nationwide to make conversion into U.S. dollars easier.
El Salvador experienced some early wins. In the first few months, crypto-based remittances rose, making up 4.5 percent of all inflows. However, this momentum did not last. By December 2024, cryptocurrency-linked remittances had declined to just 0.87 percent. Adoption of the Chivo wallet followed a similar trend. According to Bukele, three million people downloaded the app, roughly 46 percent of the population. But usage dropped significantly once the $30 bonus was spent. Fewer than 20 percent of users remained active. The average user made no Bitcoin transactions per month and only one U.S. dollar payment on average.
Among those who chose not to download Chivo, the most common reasons were a preference for cash and a lack of trust in the system. Many users expressed concern over privacy and surveillance, saying Bitcoin transactions could be tracked, unlike cash. Others reported technical problems or feared volatility.
These concerns were visible even before implementation. A poll conducted by Universidad Centroamericana José Simeón Cañas found that nearly 68 percent of Salvadorans opposed adopting Bitcoin as legal tender. Eight in ten said they did not trust the digital currency, and nine in ten said they did not fully understand it. This distrust was compounded by basic access issues: according to the World Bank, only 62 percent of Salvadorans were using the internet in 2021. The country’s rollout strategy did little to engage the public or prepare them for such a major shift.
The IMF Deal and Rollback
In 2024, the Salvadoran government secured a $1.4 billion loan agreement with the IMF, which came with significant policy conditions. These included changes to the Bitcoin Law: Bitcoin could no longer be used to pay taxes, and businesses were no longer required to accept it. These rollbacks marked a shift from mandatory, aggressive implementation to more voluntary and symbolic adoption.
Still, the government has not entirely abandoned its crypto ambitions. President Bukele announced an $83 million profit from the country’s Bitcoin holdings, bolstered by market appreciation. Although the government has announced the sale of Chivo, Bitcoin ATMs remain in place, and the vision for Bitcoin City has not been officially abandoned.
What Can be Learned?
El Salvador’s Bitcoin experiment underscores the challenges of adopting digital currencies without adequate public readiness, infrastructure, or trust. While the motivations behind the move, financial inclusion, remittance reform, and economic innovation, were valid and even admirable, the implementation was rapid and imposed from the top down. The disconnect between policy and public sentiment ultimately limited its impact.
The United States and other major economies should take note. A 2023 Pew Research study found that 63 percent of Americans have “little to no confidence that current ways to invest in, trade, or use cryptocurrencies are reliable and safe,” and only 17 percent of adults report ever having used them. These figures suggest that public trust and understanding remain major hurdles, even in highly developed economies.
If the United States truly aims to become the “crypto capital of the planet,” legislation alone will not be enough. Policymakers must also invest in public education, regulatory clarity, consumer protection, and infrastructure. Adoption should be careful, incremental, and democratic.
El Salvador’s story should not be dismissed as a failure. It was a bold experiment that offered real lessons about timing, trust, and readiness. As the world moves further into the digital currency era, these lessons will only grow more relevant.
Featured/Headline Image Caption and Citation: Bitcoin, Image sourced from The Central American Group | CC License, no changes made
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