Bitcoin Has Yet to Make Its Mark in El Salvador

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GAFILAT's latest report shows that Bitcoin accounts for less than 0.1% of total banking assets in El Salvador, indicating that the adoption of the cryptocurrency remains very low despite the government's efforts.

GAFILAT, Latin America's leading intergovernmental organization for combating money laundering and terrorist financing, has just released a report assessing El Salvador's compliance with its recommendations. The report focuses on analyzing the impact of El Salvador's legalization of Bitcoin in 2021 on the economy.

The results show that, after more than 2 years of being recognized as legal currency, Bitcoin has yet to gain significant traction in this Central American country. According to GAFILAT, the volume in El Salvador's financial system is very small, only about 6.6 million USD, equivalent to less than 0.1% of total assets managed by banks.

The report also points out that Bitcoin does not play a significant Vai in remittances, which are an important source of income for El Salvador. The majority of remittances are still sent through traditional channels such as banks and financial institutions, with less than 1% using e-wallets for this purpose.

The main reason for the limited adoption of Bitcoin is believed to be that El Salvadorans still prefer to use the dollar, which has been used as the official currency since 2000. Although the government has implemented many measures to promote the use of Bitcoin such as launching the Chivo e-wallet and giving $30 in BTC to new users, the results have been limited.

President Nayib Bukele, who initiated Bitcoin policy in El Salvador, recently admitted that Bitcoin development has not gone as expected. However, he still affirmed that Bitcoin has contributed to changing the country's image, attracting investment and tourism.

GAFILAT’s report provides a realistic look at the state of Bitcoin adoption in El Salvador, revealing that the road to mainstream adoption of the cryptocurrency is fraught with challenges. The population’s familiarity with the dollar, along with concerns about price volatility and security, are major barriers that need to be overcome before Bitcoin can truly become a mainstream means of payment in El Salvador.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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