Updated October 2026: This post has been expanded from its original December 2023 version with the full background on El Salvador's bitcoin law, how adoption and the government's holdings fared, the 2024 IMF loan agreement, and the 2025 law change that made accepting bitcoin voluntary. It is a historical account; details describe the time it covers, not today.
In early December 2023, with bitcoin trading above $42,000, El Salvador's President Nayib Bukele posted on X that his government's bitcoin holdings were now worth more than it had paid for them. By his figures, selling at that moment would return the full investment plus a profit of about $3.6 million. He said the country had no intention of selling, and he challenged critics who had predicted large losses to acknowledge the turnaround.
That post captured one moment in an experiment that began in 2021, when El Salvador became the first country to make bitcoin legal tender. The rest of the story is more mixed than either supporters or critics predicted. The value of the government's coins rose, but ordinary use of bitcoin stayed low, and in early 2025 the country changed the law as part of a loan agreement with the International Monetary Fund. This post covers the full arc.
How El Salvador adopted bitcoin
Bukele announced the plan at a bitcoin conference in Miami on June 5, 2021. Four days later, on June 9, El Salvador's Legislative Assembly passed the Bitcoin Law, with 62 of 84 deputies voting in favor. The government said it had set aside $150 million to support conversions between bitcoin and the U.S. dollar, El Salvador's official currency, which remained legal tender alongside bitcoin.
The law took effect on September 7, 2021. It required businesses to accept bitcoin as payment and allowed taxes to be paid in bitcoin. To encourage people to try it, the government launched a state-backed digital wallet called Chivo and offered $30 in bitcoin to each citizen who signed up, a program expected to cost up to $75 million. On September 6, the day before the law took effect, the government bought its first 400 bitcoin, then worth about $20.9 million.
Public opinion and actual use
The policy was a top-down decision, and surveys showed public skepticism from the start. A Central American University (UCA) poll in September 2021 found 68 percent of respondents disagreed with adopting bitcoin. In November 2021, a Francisco Gavidia University poll found 91 percent preferred the U.S. dollar.
Many people downloaded Chivo, partly for the bonus, but regular use was limited. A UCA survey 100 days after the law took effect found that about 57 percent had downloaded the government wallet, and only about a third of those used bitcoin at least once a month. A Chamber of Commerce study found that just 14 percent of businesses had made a bitcoin transaction between September 2021 and July 2022, and the Central Reserve Bank reported that bitcoin accounted for about 1.9 percent of remittances, the money Salvadorans abroad send home, from September 2021 to April 2022.
The government's bitcoin treasury
Alongside the law, the government kept buying bitcoin, often announcing purchases on social media. By January 2022 it held at least 1,801 bitcoin. The timing was difficult: bitcoin peaked in November 2021 and then fell sharply, and by June 2022 it was down about 70 percent from that high. El Salvador had spent roughly $150 million on its purchases by then.
Other parts of the plan stalled. A planned bitcoin-linked "Volcano Bond" was postponed in March 2022. In September 2023, El PaÃs estimated the government's bitcoin holdings were showing a paper loss of about $45 million.
The December 2023 turnaround
Bitcoin's recovery in late 2023 reversed that loss on paper. The BBC reported in December 2023 that the holdings were worth about $3.7 million more than their purchase price, in line with Bukele's own figures. The BBC also noted that the government had not recovered the money spent on adopting and promoting bitcoin, including Chivo and its sign-up bonus. In March 2024, as bitcoin passed $69,000, the holdings showed a paper gain of about 50 percent.
These gains depended on market timing and on not selling. They were real in the sense that the coins were worth more, but they were separate from the law's main stated goal, which was to get Salvadorans using bitcoin in daily life.
The IMF loan and the 2025 rollback
The IMF opposed the policy from early on. In January 2022 it urged El Salvador to drop bitcoin's legal-tender status, and reports at the time said continuing the policy would make a planned $1.3 billion loan less likely.
On December 18, 2024, IMF staff and El Salvador reached a staff-level agreement on a 40-month, roughly $1.4 billion arrangement under the IMF's Extended Fund Facility. The IMF's Executive Board approved it on February 26, 2025. In exchange, the government agreed to:
- Make acceptance of bitcoin by businesses voluntary rather than mandatory.
- Accept tax payments only in U.S. dollars.
- Limit the public sector's bitcoin-related activities, including transactions and purchases.
- Gradually unwind the government's participation in the Chivo wallet.
The day after the agreement, Stacy Herbert, director of El Salvador's National Bitcoin Office, said the country would keep buying bitcoin at an accelerated rate, and the government announced a purchase of 11 bitcoin. By January 19, 2025, the office reported holdings of 6,043 bitcoin, then worth about $611 million.
On January 29, 2025, the Legislative Assembly voted 55 to 2 to amend the Bitcoin Law, as Reuters reported. The changes made acceptance of bitcoin voluntary for businesses, ended its use for taxes and debts owed to the government, and dropped its description as a currency. Coverage differed on whether bitcoin keeps the label of legal tender: a ruling-party lawmaker said the reform preserved it, while others described it as ending that status. In practice, bitcoin can still be used as a means of payment, but businesses are no longer obliged to accept it. In March 2025, The Economist described the experiment as having ended in failure, a verdict focused on adoption rather than on the value of the government's holdings.
- June 9, 2021
Legislative Assembly passes the Bitcoin Law, 62 votes of 84 - September 7, 2021
Bitcoin becomes legal tender; Chivo wallet launches with a $30 bonus - January 2022
IMF urges El Salvador to drop bitcoin as legal tender - June 2022
Bitcoin is down about 70% from its November 2021 peak - December 2023
Bukele says the bitcoin holdings are in profit - March 2024
Holdings show a paper gain of about 50% - December 18, 2024
IMF staff and El Salvador reach a $1.4 billion staff-level agreement with bitcoin conditions - January 29, 2025
Law amended: accepting bitcoin becomes voluntary
How to read the outcome
Supporters point to the price gains, to the attention bitcoin brought to El Salvador, and to the government's continued accumulation of coins as evidence the strategy was sound. Critics point to low and falling use, the cost of Chivo and its bonuses, the poor fit between a volatile asset and a currency people rely on for wages and groceries, and the eventual retreat under IMF pressure. Both sets of facts are accurate. They measure different things.
What the record shows clearly is that legal-tender status did not, by itself, persuade most people to use bitcoin. Salvadorans already had a stable currency in the U.S. dollar, and most kept using it.
Takeaways that still apply
- "Profit" depends on the date. The same holdings showed a large paper loss in 2022 and 2023 and a gain in late 2023 and 2024. Any claim about crypto returns should say when it was measured and whether costs were included.
- Legal tender and adoption are different things. A law can require acceptance, but it cannot make people prefer an asset whose value swings sharply.
- Be cautious with incentive offers. Sign-up bonuses can drive downloads without lasting use, a lesson that applies to any crypto app promotion.
- Volatility is a risk for everyday money. If you hold crypto, keep money you need for regular bills in a stable currency and treat crypto as an investment that can lose value quickly.
El Salvador's experiment remains the most closely watched national bet on bitcoin. In December 2023 it looked to some like a vindication. By 2025 it had become a cautionary example of the gap between holding an asset and getting a country to use it.
Sources
- IMF Press Release No. 24/485: El Salvador and IMF reach staff-level agreement on an EFF arrangement (Dec. 18, 2024)
- IMF Press Release No. 25/043: IMF approves 40-month EFF arrangement for El Salvador (Feb. 26, 2025)
- The Block: El Salvador passes bill to revise bitcoin adoption strategy per IMF deal, citing Reuters (Jan. 30, 2025)
- Reason: El Salvador walks back its bitcoin law (Feb. 3, 2025)
- Wikipedia: Bitcoin in El Salvador
- Wikipedia: Nayib Bukele
- Wikipedia: Bitcoin Law
Top image: "Cajero Bitcoin Athena El Salvador" by Karlalhdz, CC BY-SA 4.0, via Wikimedia Commons (resized). Charts by Thank You Robot.
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