El Salvador has rescinded Bitcoin’s status as mandatory legal tender, following a series of failures in its implementation since 2021. The government’s recent reform allows private sector discretion in accepting Bitcoin, aligning with IMF requirements for a $1.4 billion credit. Despite Bukele’s earlier ambitions, acceptance of Bitcoin among Salvadorans remains low.
El Salvador has officially abandoned Bitcoin as legal tender after the experiment proved unsuccessful. President Nayib Bukele’s government initiated a reform to the Bitcoin Law, removing mandatory acceptance of the cryptocurrency in transactions. This decision aligns with stipulations set by the International Monetary Fund (IMF), which required clarity on Bitcoin’s status and allowed the government to receive a crucial $1.4 billion credit.
In 2021, El Salvador became the first country to adopt Bitcoin as legal tender; however, most citizens never engaged with the cryptocurrency. Despite ambitious plans such as creating Bitcoin City, these initiatives failed to materialize. A recent Central American University survey indicated that 92% of Salvadorans did not utilize Bitcoin in their transactions, highlighting the lack of acceptance and the associated risks.
The recent reform signifies a retreat from earlier policies advocating for Bitcoin’s mandatory use, marking a significant shift in El Salvador’s economic strategy. Although Bitcoin retains a status of ‘legal tender’, its practical application will now be voluntary. Despite the setback, Bukele’s administration continues to champion Bitcoin investments, emphasizing the need for transparency in state-held Bitcoin reserves.
Original Source: ticotimes.net
