El Salvador, the first country in the world to recognize Bitcoin as legal tender, was seen by many in the industry as a pioneer. In 2025, the small country’s Bitcoin ambitions met reality.
The Central American country made waves in 2021 when the Legislative Assembly approved a bill that required all merchants, stores and places of business to accept Bitcoin (BTC) as a form of payment. Proponents believed it would set off a chain of Bitcoin adoption and be a boon for the country’s economy.
Ambitious adoption plans, including the issuance of bonds to fund a “Bitcoin City,” met lukewarm adoption from Salvadorans. Adoption was further muddied by concerns from the International Monetary Fund (IMF).
These worries came to a head in 2025, when El Salvador had to take a second look at its Bitcoin policy.
Bitcoin adoption in El Salvador off to a lukewarm start
The passage of El Salvador’s Bitcoin Law was quickly followed by the rollout of the Chivo Wallet, the official Bitcoin wallet of El Salvador. Citizens were even incentivized to sign up with addresses pre-loaded with $30 of Bitcoin. But for many, they just took the free money and ran, never using the app again.
By law, Bitcoin should be accepted everywhere, but attempts to use Bitcoin in El Salvador were met with limited success by those who tried.
On-the-ground adoption concerns aside, there was one other looming issue, and that was El Salvador’s debt and the IMF’s position on Bitcoin and cryptocurrencies.
El Salvador was seeking a $1.4-billion loan from the IMF, as its public finances and debt needed reinforcement to be sustainable. Its external reserves and economic buffers were also wearing thin and needed strengthening against potential shocks.
The IMF didn’t want El Salvador to recognize Bitcoin as legal tender amid concerns about its risks to financial stability. It stated that widespread government use of Bitcoin, like El Salvador’s Bitcoin buying plan, can expose the state budget to contingent liabilities that depend on BTC price movements.
Bukele makes “deal with the devil” but keeps buying Bitcoin
Amid these concerns, the IMF made granting the requested loan conditional on El Salvador narrowing the scope of its Bitcoin Law. El Salvador’s economic needs were greater than the government’s Bitcoin ideals, and it repented.
In January, El Salvador made accepting Bitcoin voluntary and ensured taxes would only be paid in US dollars, the country’s de facto currency.
Many crypto industry observers were despondent. Kadan Stadelmann, chief technology officer of Komodo Platform, wrote in an opinion article for Cointelegraph that “the revolution is dead in El Salvador” after President Nayib Bukele made a “deal with the devil” — i.e., the IMF.
Bukele didn’t walk back his orange-pilled position entirely. In March, despite several requests from the IMF that El Salvador cease its Bitcoin purchases, El Salvador steamed ahead. Bukele wrote on X at the time:
Observers like John Dennehy, an El Salvador-based Bitcoin activist and educator, said this could be the government making its last accumulations before the IMF deal goes into effect. Anonymous financial commentator Unseen Finance suggested there could be “some remaining pools of funds, maybe allocated in the government in some subaccounts of different agencies, entities, maybe even some state-owned-enterprises, that had kind of been pre-allocated and set aside.”
Related: How can Bukele still stack Bitcoin after IMF loan agreement?
The question of how El Salvador could continue its Bitcoin purchases despite the IMF deal would resurface several more times. In April, El Salvador bought seven BTC, but Rodrigo Valdes, director of the Western Hemisphere Department at the IMF, said that the country was still in compliance. By May, when the IMF delivered the first $120 million of its loan, it said that El Salvador must make efforts to stop purchasing Bitcoin.
El Salvador apparently didn’t hear this because just a month later, it bought 240 BTC. Anndy Lian, author and intergovernmental blockchain adviser, told Cointelegraph at the time, “The IMF’s ‘flexible interpretation’ suggests purchases may involve non-public sector entities or reclassified assets, maintaining technical compliance.” This alternative approach allowed the country to continue purchasing Bitcoin.
By November, when El Salvador bought around $100 million in Bitcoin, the IMF told Cointelegraph it was “not going to provide a running commentary on each Bitcoin-related announcement.” A spokesperson said they’d address El Salvador’s commitments “in due course.”
As of Dec. 12, El Salvador holds 6,367 BTC, according to DropsTab’s El Salvador portfolio tracker. It’s worth over $588 million and is $267 million in profit.
What’s ahead for the Bitcoin business in El Salvador?
On-the-ground Bitcoin…
cointelegraph.com