# El Salvador Bitcoin Strategy Evolves After Policy Reversal

**Published:** 2026-06-12T12:00:21.811Z  
**Topic:** El Salvador Bitcoin  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/c6bf0f5c-2404-4aed-910d-46828e9e0c58

Five years after adopting bitcoin as legal tender, El Salvador has shifted its strategy, removing mandatory acceptance while maintaining its treasury.

Five years after El Salvador became the first nation to grant bitcoin legal tender status, the government continues to hold 7,677 BTC, currently valued at approximately $480 million [1]. While the country remains committed to its accumulation strategy, the administration has significantly altered its approach to the cryptocurrency following pressure from international financial institutions [1].

**Key takeaways**
* El Salvador’s government holds 7,677 BTC, having continued a dollar-cost averaging strategy since November 2022 [1].
* In January 2025, the administration removed the mandatory legal tender status of bitcoin as a condition for a $1.4 billion IMF loan [1].
* Businesses are no longer legally required to accept bitcoin, and the government-issued Chivo wallet is being phased out [1].
* Despite policy changes, the government has not sold any of its treasury holdings [1].
* Remittances via cryptocurrency remain a small fraction of the economy, accounting for 0.71% of the $2.43 billion sent in Q1 2026 [1].

## Shifts in Legal Status and Economic Policy
The original 2021 Bitcoin Law, which mandated that businesses accept the cryptocurrency, faced significant criticism regarding volatility and money-laundering risks from the International Monetary Fund [2]. To secure a $1.4 billion Extended Fund Facility loan, President Nayib Bukele’s administration amended the law in January 2025 [1]. These changes, which took effect 90 days later, removed the requirement for businesses to accept bitcoin and barred its use for tax payments or government debts [2]. 

While the government has stepped away from the Chivo wallet—a custodial service that previously required users to submit personal identification—it has not liquidated its bitcoin holdings [1]. The state continues to pursue its broader crypto-related ambitions, including plans for a "Volcano Bond" and a proposed Bitcoin City powered by geothermal energy [1]. Furthermore, the government has doubled down on its policy of zero capital gains tax on cryptocurrency transactions to attract foreign investment [1].

## Transparency and Political Tensions
The implementation of El Salvador’s bitcoin strategy has been marked by ongoing friction between the government and independent media. The news outlet El Faro has consistently reported on the lack of transparency surrounding the government’s bitcoin purchases and the details of a $150 million trust fund [2]. Recently, El Faro reported that assets tied to its shareholders were frozen, an action the outlet claims is retaliation for its investigative reporting on government corruption [2]. 

While some bitcoin advocates view the nation-state adoption as a milestone for the technology, others, including members of the Human Rights Foundation, have expressed concern that the erosion of democratic norms in the country contradicts the principles of individual sovereignty associated with bitcoin [2]. As the government moves forward with its "all in" approach to bitcoin and artificial intelligence, the project remains a point of contention between those who see it as a path to innovation and those who question its impact on the country's democratic institutions [1].

## Why it matters
The evolution of El Salvador’s bitcoin policy highlights the challenges of integrating decentralized financial technology into a traditional national economy. By moving away from mandatory adoption to a voluntary model, the country has sought to balance its commitment to digital assets with the requirements of global financial stability [1]. The future of the project now rests on whether the government can sustain its accumulation strategy and develop its planned infrastructure, such as Bitcoin City, while navigating international economic obligations and internal political scrutiny [1].

## Sources
1. Bitcoin Magazine — [Five Years On, El Salvador Is Still Buying Bitcoin](https://bitcoinmagazine.com/news/five-years-on-el-salvador-bitcoin)
2. Gizmodo — [El Salvador’s Bitcoin-Loving President Has Allegedly Frozen Assets of Local News Outlet](https://gizmodo.com/el-salvadors-bitcoin-loving-president-has-allegedly-frozen-assets-of-local-news-outlet-2000756750)
3. Unthinkable Build on MSN — [Bitcoin City: How El Salvador is building the future with cryptocurrency](https://www.msn.com/en-us/money/technology/bitcoin-city-how-el-salvador-is-building-the-future-with-cryptocurrency/vi-AA23K6uN?ocid=BingNewsVerp)

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Cite as: TrendWatcher, "El Salvador Bitcoin Strategy Evolves After Policy Reversal", https://www.trendwatcher.in/article/c6bf0f5c-2404-4aed-910d-46828e9e0c58