Under the promotion of President Bukele, El Salvador became the first country in the world to adopt Bit as legal tender in September 2021. Now, it has also become the first country to abandon this practice. According to El País, the parliament controlled by the ruling party has recently quietly passed an amendment to the Bit Law, officially abolishing the legal tender status of Bit, making its use entirely dependent on the user's willingness.
Bit no longer considered as currency, use becomes voluntary
The report points out that this decision was made under the pressure of the International Monetary Fund (IMF) over the past two years. The IMF required the Salvadoran government to "reduce the risks of Bit" as a condition for approving the $1.4 Billion credit urgently needed by President Nayib Bukele. The government needs to complete the legal amendment by the end of January in order to receive this funding.
This amendment has modified 6 clauses and abolished 3 key clauses. The Bit Law, which has been in effect since September 2021, will now be replaced by a new law, under which Bit will no longer be considered as currency, the requirement for merchants to accept Bit will be changed from mandatory to voluntary, and Bit cannot be used to pay taxes. Although the government has been forced to make these changes, Bukele has remained silent on this matter and has not made any comments on the X platform or in the media.
Low public acceptance, government spends 2 Billion to promote but still difficult to popularize
When the Salvadoran government initially pushed for the Bit Law, public opinion polls showed that 71% of the population were opposed. However, the government still invested over $200 Million to build Bit infrastructure, including developing the official digital wallet "Chivo Wallet" and installing Bit ATMs across the country. Furthermore, to encourage the public to use Bit, the government offered a $30 reward to each user who downloaded the official wallet. However, this policy not only failed to increase the adoption of Bit, but also led to large-scale fraud, with unscrupulous individuals creating numerous fake accounts to claim the $30 reward.
Moreover, the actual usage was far below expectations. According to data from the well-known Salvadoran polling firm Ludop, only 21% of the population had used the official wallet a year after the policy was implemented, and this proportion further decreased to 8.1% by 2024.
Bit did not bring economic prosperity, poverty population increased instead
The Bukele government had promised that the adoption of Bit would bring "economic prosperity and financial freedom", and tried to turn El Salvador into a "Bit country". However, the actual situation was quite different. A survey at the end of 2022 showed that 91.7% of the population felt that the economic situation had not improved, but had even deteriorated. By mid-2024, the Central Bank of El Salvador's research found that the domestic poverty population had increased by 55,000 compared to the previous year, further proving that the Bit policy had not achieved the government's promised economic growth.
This amendment marks a major concession by the Salvadoran government on its Bit policy, and officially brings an end to the country's "Bit experiment".
