While Bitcoin has exceeded $100,000 following Donald Trump's victory in the last elections, this is the end of cryptocurrency as legal tender in El Salvador. The international institution is providing financial support of $1.4 billion to the Central American country in the face of its public debt which exceeds 85% of its GDP in 2024.
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Legal tender is no longer Bitcoin
El Salvador's financial agreement with the IMF is accompanied by an overhaul of the “Ley Bitcoin”established in September 2021. The text made this country the first state to officially recognize cryptocurrency as legal currency alongside the American dollar.
But then what are the changes in this text? While the original law forced economic actors to accept Bitcoin as a means of payment, the obligation is transformed into an optional option. Businesses in the country have the choice of whether or not to accept Bitcoin at checkout.
Other aspects of “Ley Bitcoin” were also revised downwards. Tax payments are now made exclusively in dollars, whereas it was formerly possible in Bitcoin. The government of El Salvador is also planning the gradual reduction of its official digital wallet. Cryptocurrency transactions are subject to limitations.
The population of El Salvador does not use Bitcoin
Faced with the catastrophe of the adoption of Bitcoin as legal tender, this decision is of little surprise. According to a recent survey, 92% of the population of El Salvador does not use cryptocurrency for daily transactions. However, many tourists and investors were attracted by this initiative.
At the beginning of October, the IMF recommended a restriction of the scope of the “Ley Bitcoin” with a strengthening of the regulatory framework and a limitation of public sector exposure to cryptocurrency.
President Nayib Bukele was noted for his strong love for Bitcoin, promising to economically restore the country by imposing it as legal tender. Unfortunately, three years after the adoption of “Ley Bitcoin”it is an endgame for this initiative which has not caught on with the population
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