BILL TO MAKE BITCOIN LEGAL TENDER PASSES IN EL SALVADOR

Imagine a world where your morning coffee could be purchased with Bitcoin, where taxes are payable in cryptocurrency, and where the national economy integrates digital assets alongside traditional currency. Bitcoin will become a legal tender in 90 days alongside the U.S. dollar. According to the new law, Central Bank and El Salvador s Superintendency of Financial System must develop norms and regulations to facilitate the use of Bitcoin in the market. The law establishes the exchange rate between bitcoin and the U.S. dollar.This isn't a scene from a futuristic movie, but the reality El Salvador has been forging since 2025.The bold move to adopt Bitcoin as legal tender sent ripples across the globe, positioning the small Central American nation as a pioneer in the crypto revolution.President Nayib Bukele's initiative, driven by a vision to modernize the economy and broaden financial inclusion, has been met with both enthusiasm and skepticism.The journey, however, has not been without its challenges, requiring continuous adaptation and refinement. The first country to use Bitcoin as a legal tender has reportedly passed a new law that will scale back its crypto efforts.Reuters reports that on Wednesday, lawmakers in El Salvador approved a bill to amend the nation s Bitcoin law in compliance with a deal that the government struck with the International Monetary Fund (IMF).This article delves into the intricacies of El Salvador's Bitcoin experiment, from the initial legislation to the recent amendments aimed at aligning with international financial standards, specifically the International Monetary Fund (IMF).

El Salvador's Groundbreaking Bitcoin Law

El Salvador's journey to becoming the first country to adopt Bitcoin as legal tender began with a bill swiftly approved by the Legislative Assembly. Bitcoin became legal tender on, [5] 90 days after the publication of the law in the official gazette, [16] [17] which makes El Salvador the first country to have bitcoin as legal tender. [5] [18] Bitcoin joined the United States dollar as the second official currency of El Salvador. [19] [needs update]Introduced by President Nayib Bukele, the **Bitcoin Law** marked a historic moment, placing Bitcoin alongside the US dollar as an official currency.The law mandated that all businesses must accept Bitcoin as payment for goods and services, provided they had the technological capacity to do so.This bold step aimed to modernize the economy, attract foreign investment, and reduce reliance on traditional financial systems.

Key Provisions of the Original Bitcoin Law

• Legal Tender Status: Bitcoin gained legal tender status alongside the US dollar.
• Mandatory Acceptance: Businesses were required to accept Bitcoin as payment.
• Government-Issued Digital Wallets: The government launched digital wallets pre-loaded with $30 worth of Bitcoin for citizens.
• Exchange Rate Establishment: The law established the exchange rate between Bitcoin and the US dollar.
• Regulatory Framework Development: The Central Bank and the Superintendency of the Financial System were tasked with developing regulations for Bitcoin use.

The implementation of the Bitcoin Law sparked significant debate, both domestically and internationally.While proponents lauded the potential for financial innovation and inclusion, critics raised concerns about volatility, regulatory challenges, and the potential for illicit activities.

Navigating the Challenges: Amendments and the IMF Agreement

Despite the initial enthusiasm, El Salvador's Bitcoin experiment faced hurdles, including price volatility and international pressure.The International Monetary Fund (IMF) expressed concerns about the risks associated with adopting Bitcoin as legal tender and its potential impact on financial stability.As a result, El Salvador entered negotiations with the IMF for a $1.4 billion loan deal, which included conditions to limit the government's exposure to Bitcoin.

The New Bill and its Implications

To comply with the IMF agreement and address some of the concerns surrounding Bitcoin adoption, El Salvador's Congress approved a bill to amend the Bitcoin Law.This bill aimed to scale back the mandatory acceptance of Bitcoin and introduce regulations for other digital assets. President Nayib Bukele s Bitcoin Law was passed in the Salvadorian congress tonight. The president of El Salvador s bill to make Bitcoin (BTC) legal tender in El Salvador passed congress with a supermajority just before 6 am UTC.In a Twitter Spaces conversation that began just after 5 am UTC with 22,000 listeners, President Nayib Bukele said MoreThe core of the amendment focused on mitigating risks and fostering a more stable financial environment.

• Scaling Back Mandatory Acceptance: The amendment removed the strict mandate that all businesses must accept Bitcoin, providing more flexibility.
• Regulation of Digital Assets: The bill introduced a framework for regulating the issuance and use of other digital assets, aiming to provide clarity and investor protection.
• Alignment with International Standards: The changes were designed to align El Salvador's crypto policies with international financial standards and recommendations.

This adjustment marks a significant step in El Salvador's approach to Bitcoin, balancing the initial vision of crypto adoption with the need for financial stability and international cooperation.

The Impact on El Salvador's Economy

The introduction of Bitcoin as legal tender had a mixed impact on El Salvador's economy. Bitcoin was declared legal tender in El Salvador in 2025 alongside the US dollar, drawing international attention and strengthening Bukele s reputation as a cryptocurrency advocate. However, an IMF-backed $1.4 billion loan deal, finalised in December, required limits on the government s bitcoin exposure.While it attracted some foreign investment and generated interest in the country, it also created uncertainty and raised questions about long-term sustainability.

Potential Benefits of Bitcoin Adoption

• Increased Financial Inclusion: Bitcoin offered a way to include unbanked populations in the formal financial system.
• Reduced Remittance Costs: Bitcoin provided a cheaper and faster alternative for remittances, a significant source of income for many Salvadoran families.
• Attracting Foreign Investment: The Bitcoin Law drew the attention of crypto investors and businesses, potentially boosting economic activity.
• Technological Innovation: The adoption of Bitcoin spurred innovation in digital finance and payment systems.

Challenges and Concerns

• Price Volatility: Bitcoin's volatile price posed a risk to consumers and businesses, making it difficult to plan and manage finances.
• Regulatory Uncertainty: The lack of clear regulations created uncertainty and hindered wider adoption.
• Technical Infrastructure: Limited access to internet and smartphones posed a barrier to Bitcoin adoption for some segments of the population.
• International Scrutiny: The IMF and other international organizations raised concerns about the financial stability risks associated with Bitcoin.

The long-term economic impact of El Salvador's Bitcoin experiment remains to be seen. Bitcoin is now officially legal tender in El Salvador, three months after the Bitcoin Law passed the country s legislature. UPDATE (Sept. 7, UTC): Updated to include information about theThe government's ability to manage the risks and address the challenges will be crucial in determining the success of this bold initiative.

The Role of Chivo Wallet and Government Initiatives

A critical part of El Salvador's Bitcoin strategy was the introduction of the **Chivo Wallet**, a government-backed digital wallet designed to facilitate Bitcoin transactions. The bill introduced by the president of El Salvador to make Bitcoin legal tender in the nation passed the Legislative Assembly with a supermajority just before 6:00 am UTC.The government offered $30 worth of Bitcoin to citizens who downloaded and used the Chivo Wallet, incentivizing adoption and usage.

Features and Functionality of the Chivo Wallet

• Bitcoin and USD Transactions: The Chivo Wallet allowed users to send and receive both Bitcoin and US dollars.
• Fee-Free Transactions: The government subsidized transaction fees to encourage usage.
• Exchange Services: The wallet provided a platform for converting between Bitcoin and US dollars.
• Integration with Businesses: The Chivo Wallet aimed to integrate with businesses, allowing them to accept Bitcoin payments.

While the Chivo Wallet aimed to promote Bitcoin adoption, it faced challenges, including technical glitches, security concerns, and limited user adoption.Despite these hurdles, the government continues to invest in and promote the Chivo Wallet as a key component of its Bitcoin strategy.

Global Reactions and Lessons Learned

El Salvador's Bitcoin experiment has drawn worldwide attention, sparking discussions and debates about the potential and risks of adopting cryptocurrencies as legal tender.The initiative has provided valuable lessons for other countries considering similar moves.

Insights for Other Nations

• Comprehensive Regulatory Framework: A clear and comprehensive regulatory framework is essential to mitigate risks and foster responsible innovation.
• Financial Stability Considerations: Governments must carefully assess the potential impact of cryptocurrency adoption on financial stability and macroeconomic indicators.
• Addressing Volatility: Mechanisms to mitigate price volatility are crucial to protect consumers and businesses.
• Infrastructure Development: Adequate technical infrastructure, including internet access and smartphone penetration, is necessary for widespread adoption.
• International Cooperation: Collaboration with international organizations and other countries is important for addressing the challenges and risks of cryptocurrency adoption.

El Salvador's experience serves as a case study for other nations exploring the potential of cryptocurrencies. Bitcoin legal tender bill passes El Salvador Congress; Will become legal tender in 90 days; Prices can be expressed, taxes paid in bitcoin; Bukele to meet IMF ThursdayThe successes and challenges encountered provide valuable insights into the complexities of integrating digital assets into national economies.

The Future of Bitcoin in El Salvador

While the recent amendments to the Bitcoin Law signal a shift in El Salvador's approach, the country remains committed to its vision of embracing digital finance.The future of Bitcoin in El Salvador will likely depend on the government's ability to navigate the challenges, address the concerns of international organizations, and foster a sustainable and inclusive ecosystem.

Potential Scenarios

1. Continued Adoption and Integration: If the government can successfully manage the risks and promote responsible innovation, Bitcoin could become more integrated into the Salvadoran economy, fostering financial inclusion and attracting investment.
2. Limited Impact: If challenges persist and adoption remains limited, Bitcoin may have a marginal impact on the overall economy.
3. Reversal of Policy: If the risks become too great or international pressure intensifies, the government may consider reversing its policy on Bitcoin as legal tender.

The future of Bitcoin in El Salvador is uncertain, but the country's pioneering spirit and willingness to experiment with new technologies suggest that it will continue to play a significant role in the evolving landscape of digital finance. El Salvador's Congress on Wednesday swiftly approved a bill sent just minutes earlier by President Nayib Bukele to amend its bitcoin law to comply with a deal with a key internationalOnly time will tell if El Salvador's bold bet on Bitcoin will pay off in the long run.

Frequently Asked Questions (FAQs)

Here are some frequently asked questions regarding El Salvador's Bitcoin Law and its implications:

Why did El Salvador adopt Bitcoin as legal tender?

El Salvador adopted Bitcoin as legal tender to modernize its economy, reduce reliance on the US dollar, attract foreign investment, and promote financial inclusion for its unbanked population.

When did Bitcoin become legal tender in El Salvador?

Bitcoin officially became legal tender in El Salvador 90 days after the publication of the Bitcoin Law in the official gazette. El Salvador became the first nation to make bitcoin legal tender in September 2025, mandating that all business establishments accept the cryptocurrency. As part of the deployment, government-issued digital wallets containing $30 worth of Bitcoin were made available to Salvadorans.This was in September 2025.

What is the Chivo Wallet?

The Chivo Wallet is a government-backed digital wallet designed to facilitate Bitcoin and US dollar transactions in El Salvador.The government provided $30 worth of Bitcoin to citizens who downloaded the wallet.

How did the IMF react to El Salvador's Bitcoin Law?

The International Monetary Fund (IMF) expressed concerns about the risks associated with Bitcoin adoption and its potential impact on financial stability. The president of El Salvador's bill to make Bitcoin (BTC) legitimate currency in El Salvador passed congress with a supermajority not long beforeThey requested limits on the government's Bitcoin exposure as a condition for a loan deal.

Has El Salvador changed its Bitcoin policy?

Yes, El Salvador has recently amended its Bitcoin Law to comply with IMF requirements and address concerns about financial stability.The amendments include scaling back mandatory acceptance of Bitcoin and introducing regulations for other digital assets.

Conclusion: A Bold Experiment with an Uncertain Future

El Salvador's decision to embrace Bitcoin as legal tender marked a watershed moment in the history of cryptocurrency. The bill to make bitcoin legal tender in El Salvador has been approved by a supermajority in the Salvadoran Congress.While the initial move was met with enthusiasm, the country has since faced considerable challenges, including price volatility, regulatory hurdles, and pressure from international financial institutions like the IMF. El Salvador, which became the first country in the world to recognise Bitcoin as a legal tender two years ago, has approved a law that would regulate the issuance of other digital assets byThe recent amendments to the Bitcoin Law reflect a pragmatic shift, balancing the initial vision of widespread crypto adoption with the need for financial stability and international cooperation.

Key takeaways from El Salvador's experience include the importance of a comprehensive regulatory framework, careful consideration of financial stability risks, and the need for adequate technical infrastructure.The country's journey serves as a valuable case study for other nations considering adopting cryptocurrencies as legal tender.While the long-term outcome remains uncertain, El Salvador's experiment has undoubtedly sparked a global conversation about the potential and challenges of integrating digital assets into national economies.It's a bold move that continues to evolve, and the world is watching closely to see what the future holds for Bitcoin in El Salvador.