The Bitcoin Experiment: El Salvador’s Bitcoin Story From Legal Tender to 7,643 BTC Reserve

Few countries are as crypto-friendly as El Salvador. Far from all-time highs, the Government continues its efforts to make Bitcoin more accessible to its citizens. More ATMs, crypto payments for businesses, and a $30 sign-up bonus for Salvadorans who download their wallet app.

All this Bitcoin “experiment” started in September 2021, when President Nayib Bukele bought 410 BTC (+$20M). El Salvador also became the first country to accept Bitcoin as legal tender. All these helped Bitcoin reach new all-time highs. Briefly.

No one said that crypto adoption would be profitable. 

But after losing 50% of value, Salvadorans aren’t as positive as their President. The average citizen has either abandoned the wallet, sold Bitcoin for dollars, or lost it in identity theft scams. El Salvador’s Bitcoin holdings have grown dramatically since 2021.

By May 2026, the government reported holding 7,643 BTC as part of a long-term strategic accumulation strategy, with purchases continuing at approximately 1 BTC per day through early 2026.

El Salvador: First Bitcoin-Legal-Tender Nation

It seems developing countries are the most open to new technologies. One of them, El Salvador, wants to become a worldwide hub for crypto innovation and investment. As the youngest president ever elected, Nayib Bukele is running ambitious campaigns to address the long history of street violence, a 25% poverty rate, 25% of the population with Internet access, and ~65% of unbanked citizens.

It also has one of the highest emigration rates in Latin America, with $7.5B coming from remittances. 

Despite these issues, El Salvador has an increasing annual Gross Domestic Product (GDP) of ~$32B (2023) with ~6.5M of population. It might not be the ideal country for crypto adoption. But Bitcoin can be the opportunity to support the financially underserved majority.

The first week of September 2021:

• The Legislative Assembly approves Bitcoin as legal tender
• Several protesters showed disapproval against new crypto laws
• Nayib makes the first of many BTC purchases to come
• Chivo wallet goes live

On the brink of economic disaster, Bukele hopes that pro-Bitcoin policies help the country attract more investors and entrepreneurs. He also plans to build a self-sustainable, crypto-powered “Bitcoin City,” or at least a crypto tax haven. And in the event of a dollar collapse, Bitcoin should make El Salvador less dependent.

As for 2023, only one country has followed El Salvador’s legal tender decision… Central African Republic (CAR) in April 2022. Both countries share similar problems regarding history, Internet access, and income inequality. It’s unlikely that a third country joins anytime soon given the results of the Bitcoin experiment.

The Bitcoin Experiment: Results from 2021 to 2026

This Nayib Tracker shows all publicly announced purchases by El Salvador’s President. There are at least 2500 BTC across tens of orders, half of which happened before the Bitcoin 2021 ATH from ~$40,000 to $69,045. It’s going to need a long bull run just to break even with the current P/L:

From a glance, Nayib’s Bitcoin experiment has lost about half of the $111 million invested from September 2021 to March 2023. The average investor may not see it as a failure under the HODL mentality. But how does that work for a country with already great debt and financial hardship?

It might have not cost much money— probably less than 1% of the government’s funds— but it definitely compromised trust. Both from the citizens against the pro-crypto culture and international lenders. Credit agencies like Moody’s and Fitch have downgraded El Salvador’s ratings to Caa3 and CC (3rd and 4th lowest).

Without “adequate progress,” also S&P could downgrade El Salvador from CCC+ in 6-18 months. 

Perhaps the most alarming reaction is the request from the International Monetary Fund (IMF). The IMF provides counseling, training, and financial assistance to its member countries, especially those with economic instability, crisis, and payment difficulties. It lent nearly $400M during the 2020 pandemic, most of which is repaid.

One year into the Bitcoin experiment, El Salvador became one of the most likely countries to default on debt obligations in America. In January 2022, the IMF requested to revert the Bitcoin legal tender status. But Bukele is too committed to taking it seriously.

Despite harsh criticism— and public debt over 80% of GDP— El Salvador did not default on debt obligations on January 24th, 2023. President Bukele announced the repayment of an $800M bond maturing that day, interest included.

For now, El Salvador recovers a rating of CC (Fitch) or Caa3 with a stable outlook (Moody’s). But will it recover the Salvadorans’ trust?

Salvadorans Oppose Pro-Bitcoin Government

Even at the peak of the 2021 crypto hype, Salvadorans had no intention to adopt Bitcoin. You’d be surprised at how few locals use or accept Bitcoin compared to the social media image. Many believe the legal tender decision was approved without public consent without vote or referendum— and so was the 2600 Bitcoin Experiment.

The most accurate description of social opinion is this survey from the Central American University’s Institute of Public Opinion (2021):

From December 7th for eleven days, coordinators surveyed in person at least 1,298 locals selected randomly.

According to a 2021 survey by the Central American University’s Institute of Public Opinion, 7 out of 10 citizens disagreed with the Bitcoin legal tender decision, with 90% of respondents reporting they did not know what Bitcoin was at the time. As of 2024-2025, polls cited by local outlets continue to show low active daily use of Bitcoin among Salvadorans, despite years of government promotion and the $30 Chivo wallet incentive.

Most Salvadorans also agree on the following:

• Bitcoin shouldn’t be necessarily removed but should be voluntary
• Bitcoin as legal tender has barely changed their financial situation
• Chivo wallet is rarely used more than once a month, if not only for the $30 sign-up bonus

Before the survey, Salvadorans had already been protesting since the day the Bitcoin Law was official. 

But even if they wanted to adopt Bitcoin with a Chivo wallet, they would find an unpleasant surprise…

To open a Chivo wallet account, you need to take a picture of the Salvadoran DUI (ID Card) and a selfie. It’s supposed to work as KYC, but apparently, they didn’t test its reliability enough. Pretty much anything you screenshot will be accepted, whether it’s a card photocopy or a coffee mug.

Bukele didn’t know that 10-20% of the +2M app registrations were fraudulent. Identity thieves also claimed other citizens’ DUIs. So they couldn’t ever register because of the already-taken number.

That’s where ~$24M in taxpayer funds went, except this time Bitcoin was not to blame. And if these funds are the same Bitcoins as in the investment chart, Bukele is going to need far more than $42K to break even. But there’s another way…

What Changed in 2025: The Bitcoin Law Reform

In January and February 2025, El Salvador’s legislature revised the Bitcoin Law in a significant policy shift. The reform removed the mandatory acceptance requirement for businesses, meaning companies are no longer legally required to accept Bitcoin as payment. This change was directly tied to negotiations with the International Monetary Fund (IMF) for access to multilateral financing.

The IMF’s formal assessment, published in March 2025, outlined conditions including the government limiting public-sector Bitcoin accumulation and strengthening regulatory oversight under the Law on Digital Assets (LEAD). The deal gave El Salvador greater access to multilateral financing while preserving the government’s ability to hold its existing Bitcoin reserve.

Key changes under the 2025 reform:

• Mandatory business acceptance of Bitcoin: Removed
• Government Bitcoin purchases: Continued under a strategic reserve model
• Regulatory framework: Expanded under the Law on Digital Assets (LEAD)
• IMF financing access: Unlocked following reform compliance
• Tax treatment: Updated digital asset tax reporting requirements introduced

El Salvador’s Bitcoin Reserve: A Timeline

👉 Quick takeaway: El Salvador has never stopped buying Bitcoin. Despite removing the mandatory legal tender requirement in January 2025, the government accelerated purchases through 2025 and into 2026, reaching 7,643 BTC as of May 2026.

What Does the IMF Deal Actually Mean?

The IMF’s 2025 engagement with El Salvador was not a simple demand to drop Bitcoin. Instead, it was a structured policy dialogue tied to access to multilateral financing. The key conditions attached to the deal included:

• The government limiting new public-sector Bitcoin accumulation (the fiscal sector was not to increase holdings as a share of fiscal assets)
• Strengthening the regulatory framework for digital assets under LEAD
• Improving transparency in reporting of Bitcoin-related fiscal positions
• Removing mandatory acceptance requirements for private businesses

In exchange, El Salvador gained access to multilateral financing that had been restricted due to concerns about fiscal risk from Bitcoin exposure. The IMF’s March 2025 Selected Issues paper formally assessed El Salvador’s digital assets framework and financial inclusion context, noting that the policy shift represented a more sustainable path for integrating crypto into the national economy.

For everyday Salvadorans, the deal’s practical impact was limited in the short term. As of early 2025, polls continued to show low daily Bitcoin usage despite years of government promotion.

Bitcoin Education in El Salvador’s Public Schools

One of the less-covered but significant developments of 2024-2026 is El Salvador’s push to integrate Bitcoin and digital asset literacy into its public education system. The government overhauled its Bitcoin learning program for schools, introducing revised curricula aimed at building foundational understanding of digital assets among younger generations.

This initiative aligns with the IMF’s financial inclusion recommendations and represents a shift from the coercive adoption strategy of 2021 toward a longer-term educational approach. Whether this produces meaningful grassroots adoption over the next decade remains to be seen, but it signals that the Bukele administration views Bitcoin as a permanent fixture of national economic policy rather than a temporary experiment.

New Bitcoin Infrastructure: ATMs, Wallets, and El Zonte

El Zonte, the coastal village dubbed ‘Bitcoin Beach’ that inspired El Salvador’s national Bitcoin experiment, remains at the center of new infrastructure pilots. In 2026, a Bitcoin Banknote ATM network pilot launched in El Zonte, representing a new generation of Bitcoin-to-cash infrastructure operating under the LEAD regulatory framework.

These pilots are open-source and regulation-compliant, a significant shift from the government-controlled Chivo wallet approach of 2021. The decentralized, community-driven model of El Zonte contrasts with the top-down national rollout that drew criticism for its KYC failures and identity fraud problems.

New Crypto Regulations in El Salvador

El Salvador’s crypto regulatory environment has evolved significantly since 2023. The country introduced the Law on Digital Assets (LEAD), which established a formal licensing framework for crypto service providers, updated tax reporting requirements for digital assets, and aligned regulatory oversight with IMF recommendations.

Bitcoin capital gains, previously exempt, are now subject to a flat 10% tax. Businesses must now comply with KYC and AML requirements under the LEAD framework, adding compliance steps that were not formalized in the original 2021 Bitcoin Law.

Frequently Asked Questions

Is Bitcoin still legal tender in El Salvador?

As of the January 2025 reform, Bitcoin is no longer mandatory legal tender. Businesses are no longer required to accept it as payment. Bitcoin remains legal and the government continues to hold it as a reserve asset, but its status has shifted from mandatory currency to a regulated, voluntary digital asset.

How much Bitcoin does El Salvador hold in 2026?

As of May 2026, El Salvador’s government holds 7,643 BTC, with purchases continuing at approximately 1 BTC per day during early May 2026.

What did El Salvador agree to with the IMF?

In early 2025, El Salvador revised its Bitcoin Law and digital assets framework to align with IMF conditions, including removing mandatory Bitcoin acceptance and limiting public-sector accumulation. In return, El Salvador gained access to multilateral financing.

Do Salvadorans actually use Bitcoin day-to-day?

Polling data from 2024-2025 shows that a large portion of the population does not use Bitcoin in daily commerce despite years of legal tender status and government promotion. Low usage persists even after the $30 Chivo wallet sign-up bonus campaign.

What is Bitcoin City and has it been built?

Bitcoin City was announced as a tax-free, crypto-powered city to be funded by Volcano Bonds. As of 2025-2026, the project remains largely unrealized. The Volcano Bonds have faced delays and the city has not progressed significantly beyond the announcement phase.