El Salvador, the first country to adopt Bitcoin (BTC) as legal tender, is facing challenges. According to a report, 89% of Bitcoin service providers registered in the Central American country have become non-operational.
Only 20 of 181 Bitcoin Firms in El Salvador Still Active
The Central Reserve Bank data shows that only 20 companies from 181 officially registered to offer Bitcoin services are functional. This includes the government-backed Chivo Wallet. The other remaining 161 companies have been tagged “non-operating.”
Out of the 161 companies, at least 22 have not met with regulatory requirements as spelt out in Article 4 of the country’s Bitcoin Law Regulation. Part of the law stipulates that companies must operate by upholding high standards of honesty and integrity.
This involves clear records of assets and liabilities, anti-money laundering programs, and efficient cybersecurity systems.
Hon Ng, chief legal officer of Bitget cryptocurrency exchange, commented on the recent development and noted a need to address infrastructural challenges. Ng maintained that El Salvador might need to rethink its regulatory guidelines and infrastructural support.
Bukele’s Experiment Faces Mounting Technical and Global Pressure
Interestingly, President Nayib Bukele acknowledged that El Salvador would undergo a learning curve at the adoption of BTC as legal tender. President Bukele maintained that this would not be achieved quickly but insisted that the country make a significant shift.
Despite launching the Chivo Wallet and offering a $30 incentive to citizens who signed up, adoption has not been seamless. Reports indicate that the Chivo Wallet encountered technical challenges, and most citizens have stopped using the initiative.
Meanwhile, the International Monetary Fund (IMF) has pressured El Salvador to stop acquiring Bitcoin. The concern came after the country secured a $1.4 billion loan facility in December 2024.
El Salvador should scale back on the Bitcoin acquisition as part of the deal, but it has continued to grow its treasury to 6,105 BTC.
Hope Remains for a Bitcoin Reset
Analysts opine that despite these developments, El Salvador’s Bitcoin adoption story is far from over. With 20 providers still operational, the country can rejig the ecosystem and rekindle BTC adoption.
How the Central American nation achieves that remains a thing of interest to bitcoiners globally.
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