SUBSCRIBE & SAVE Less than $3 per week View Profile The Explainer Talking Points The Week Recommends Newsletters From the Magazine The Week Junior Food & Drink Personal Finance All Categories Newsletter sign up under the radar The collapse of El Salvador's bitcoin dream Central American nation rolls back its controversial, world-first cryptocurrency laws Newsletter sign up (Image credit: Illustration by Marian Femenias-Moratinos / Getty Images) By Harriet Marsden, The Week UK published 5 March 2025 In 2021, El Salvador caught the world's attention by becoming the first country to make cryptocurrency legal tender, alongside the US dollar. Last December, as the price of bitcoin broke $100,000 (£77,765) for the first time, the young president Nayib Bukele posted on social media that the Central American nation's crypto holdings had more than doubled in value. But now – as the price for securing a $1.4 billion (£1.1 billion) loan deal from the International Monetary Fund – the country has had to roll back its controversial bitcoin policies. Salvadoran businesses are now free to decide whether or not to accept bitcoin, and taxes are no longer payable in the cryptocurrency. "The potential risks of the bitcoin project will be diminished significantly, in line with Fund policies," the IMF said. Effectively, bitcoin's days as legal tender in El Salvador are over. Subscribe to The Week Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives. SUBSCRIBE & SAVE Sign up for The Week's Free Newsletters From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox. From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox. 'Cryptocurrency paradise' Bukele's embrace of bitcoin was part of an attempt to "rebrand the tiny and impoverished" nation as a "surfing and cryptocurrency paradise", said the Financial Times. He announced plans to build a "Bitcoin City" in the jungle, "powered by geothermal energy on the slopes of a volcano". The president claimed cryptocurrency would bring the "70% of Salvadorans who do not use traditional banks into the financial system", said France24. "Swatting away warnings about volatility risks", he ploughed an "undisclosed amount of public money into cryptocurrencies". But the IMF always opposed Bukele's adoption of bitcoin, said the BBC, and warned that it would be an obstacle to any financial assistance. For a long time, the Salvadoran economy has "teetered on the edge of default", as the IMF stayed "wary" of lending to the country while the volatile currency – with its "potential use in money-laundering and other crimes" – was legal tender, said The Economist. 'More costs than benefits' El Salvador is still "a focal point for the global bitcoin community", said Forbes. But the mood is now "somewhat subdued" among crypto enthusiasts, one local journalist told the news site. "A lot of international bitcoiners moved to El Salvador for the Bitcoin Law; some Salvadorans returned," said Joe Nakamoto. "Now, doubt about the country's future with regards to bitcoin has crept in." But bitcoin's "demotion may be more of a blessing than a concession", said The Economist. Crypto has brought El Salvador "more costs than benefits". The much-promised investment and tourism "have been small beer", while financial gains have been "meagre at best", because the currency "never really caught on". According to a poll published in January by Universidad Centroamericana, 92% of Salvadorans didn't use it at all last year. Overall, the policy has cost $375 million (£291 million), according to estimates by rating agency Moody's – a sum that "far exceeds the profits on bitcoin holdings, which could still evaporate". There is still no Bitcoin City. Bukele's "obsession with cryptocurrency has done little to ease El Salvador's economic woes", said the magazine. He is "just the latest crypto-utopian to see his wild ideas dissolve on contact with reality". Explore More Cryptocurrency Cryptocurrencies Latin America Sign up for Today's Best Articles in your inbox A free daily email with the biggest news stories of the day – and the best features from TheWeek.com Contact me with news and offers from other Future brandsReceive email from us on behalf of our trusted partners or sponsorsBy submitting your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over. Harriet Marsden, The Week UK Social Links Navigation Harriet Marsden is a writer for The Week, mostly covering UK and global news and politics. Before joining the site, she was a freelance journalist for seven years, specialising in social affairs, gender equality and culture. She worked for The Guardian, The Times and The Independent, and regularly contributed articles to The Sunday Times, The Telegraph, The New Statesman, Tortoise Media and Metro, as well as appearing on BBC Radio London, Times Radio and “Woman’s Hour”. She has a master’s in international journalism from City University, London, and was awarded the "journalist-at-large" fellowship by the Local Trust charity in 2021. 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