El Salvador Scales Back Bitcoin as Legal Tender After IMF Pressure

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🔑 Key Takeaways

  • El Salvador will reduce its use of Bitcoin as legal tender following agreements with the IMF.

  • Tax payments in BTC suspended and state-run Chivo wallet adjusted.

Bitcoin and dollar coin split on El Salvador flag symbolizing reduced legal tender use after IMF pressure

🗞 Main Story

El Salvador became the first country to adopt Bitcoin as legal tender in 2021.
However, by 2024 and 2025, the government scaled back its official use after pressure from the IMF.

Tax payments in BTC were suspended, the obligation for merchants to accept Bitcoin was removed, and the state-managed Chivo wallet was adjusted.

The move reflects the retreat of a pioneering policy that once made global headlines but also generated losses and diplomatic tensions.

Now, El Salvador is seeking to restore international confidence and secure external financing, reigniting the global debate about Bitcoin’s role as a national currency.

Illustration of financial conflict with two figures firing coins at each other, representing tensions over Bitcoin policy in El Salvador

🔬 Expert Opinions

  • Daniel Salazar (Economist, World Bank):
    “El Salvador’s reversal shows the limits of impulsive crypto policies without solid financial backing.”

  • Alejandra Navarro (Political Analyst, Georgetown University):
    “Bitcoin as legal tender was a global experiment, but its sustainability remains in doubt.”

🌟 Implications

This policy shift reshapes the global narrative on state-level Bitcoin adoption, prompting caution in other governments that had considered similar paths.

🛬 Sources

  • El País – “El Salvador cuts back official Bitcoin use after IMF pressure”

  • Bloomberg Línea – “Government limits BTC tax payments and adjusts Chivo wallet”

Protesters in front of IMF building holding Bitcoin symbol, reflecting opposition to IMF pressure on El Salvador

📝 Editorial Opinion

Bitcoin in El Salvador: risky experiment or challenge to the global monetary order?

El Salvador’s experience with Bitcoin as legal tender is often described as a risky experiment, even a “leap into the void.” Yet it is fair to ask what might have happened if other Latin American economies had joined this decision in parallel. Perhaps today’s regional scenario would look very different.

From a macroeconomic perspective, adopting Bitcoin could have provided a mechanism to prevent hyperinflation, reduce structural dependence on the U.S. dollar, and ultimately gain degrees of freedom from the heavy burden of external debt. In this context, it is inevitable to question to what extent the IMF has sought to “discipline” El Salvador—and by extension, the region—limiting a possible alternative to the dollar-dominated monetary order.

Moreover, if one argues that the sustainability of Bitcoin as legal tender is doubtful, it should also be remembered that the dollar’s own hegemony rests on a fiat system without gold backing. Shouldn’t the same logic then raise the idea of a return to the gold standard to sustain the dollar’s legitimacy? The paradox highlights that beyond evident risks, the debate over Bitcoin as a national currency questions the international monetary architecture itself.

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