El Salvador’s Bitcoin Experiment Is Running on Fumes

89% of Registered Crypto Firms Are Inactive as Regulatory and Operational Hurdles Mount

El Salvador’s high-profile embrace of Bitcoin as legal tender once captivated global headlines. Today, however, the country’s crypto revolution appears to be losing momentum quietly but rapidly.

According to recent data published by El Mundo, nearly 90% of registered Bitcoin businesses in El Salvador are no longer operating. The figures, drawn from the Central Reserve Bank, indicate that out of 181 officially registered Bitcoin service providers, 161 are marked as inactive. That’s an astonishing 89% attrition rate, raising significant questions about the feasibility of President Nayib Bukele’s grand crypto vision.

With only 20 active crypto service providers remaining, including the state-backed Chivo Wallet, the idea of El Salvador becoming a “crypto hub” is facing a harsh reality check.

From Global Crypto Pioneer to Industry Retraction

Bitcoin’s Legal Tender Status Sparked Global Buzz, But Local Adoption Lagged

In 2021, El Salvador made history by becoming the first country in the world to adopt Bitcoin as legal tender, positioning itself as a trailblazer in financial innovation. The Bitcoin Law required all businesses to accept BTC (unless technologically unable to) and introduced a $30 BTC incentive through the Chivo Wallet.

At the time, Bukele touted the move as a game-changer for:

• Lowering remittance costs

• Promoting financial inclusion

• Attracting foreign tech investment

However, the rollout was marred by:

• Technical glitches in Chivo Wallet

• Low sustained adoption

• Concerns from traditional financial institutions

• Public skepticism and regulatory ambiguity

By 2022, studies suggested that most Salvadorans had stopped using Chivo altogether. What was initially billed as a transformative national shift began showing signs of limited traction and growing friction.

The Numbers Don’t Lie: 161 of 181 Crypto Firms Are Now Inactive

Regulatory Barriers and Operational Constraints Choke Off Momentum

The newly surfaced data offers the most concrete signal yet that El Salvador’s crypto economy is faltering beneath the surface. While the Bitcoin Law created a legal pathway for firms to operate, many simply haven’t made it past the regulatory and operational thresholds.

A key issue lies in Article 4 of the Bitcoin Law Regulation, which mandates:

• Robust anti-money laundering (AML) programs

• Comprehensive cybersecurity protocols

• Transparent reporting of assets and liabilities

• High standards of integrity and honesty

While well-intentioned, these requirements appear misaligned with the capabilities of most crypto startups, especially smaller firms lacking infrastructure and resources.

Crypto Executive: “Gap Between Law and Reality Is Too Wide”

Bitget Legal Chief Hon Ng Calls Out Policy Execution Flaws

Hon Ng, Chief Legal Officer at crypto exchange Bitget, which holds a crypto license in El Salvador, echoed the concerns highlighted in El Mundo’s report.

“With over 88% of Bitcoin-related companies still non-operational, it’s evident that there are infrastructural and institutional hurdles to address,” Ng told crypto.news.

He emphasized a disconnect between progressive legal intentions and on-the-ground business realities, pointing out that:

• Many providers can’t afford to meet the regulatory demands

• There’s regulatory ambiguity on enforcement and compliance

• Mainstream adoption remains extremely limited

In short, the ecosystem that was supposed to support Bitcoin’s legal tender status has failed to take root.

IMF Pressure, Quiet Policy Rollbacks, and Uncertain Funding

Government Still Promotes Bitcoin, But Enforcement Has Quietly Loosened

By 2022, the Bitcoin Law had become a major sticking point in El Salvador’s negotiations with the International Monetary Fund (IMF), which warned of:

• Financial instability

• Consumer protection risks

• Fiscal exposure tied to Bitcoin volatility

The IMF even recommended the repeal of Bitcoin’s legal tender status—a move El Salvador resisted publicly but appears to have conceded to behind the scenes.

Subsequent legislative amendments made BTC acceptance optional for businesses and removed the requirement for state involvement in crypto transactions. While the government didn’t formally walk back the law, Bitcoin’s practical enforcement was quietly defanged.

Nonetheless, President Bukele has doubled down rhetorically—announcing that El Salvador holds over 6,100 BTC, now worth over $500 million. Critics remain skeptical, citing unclear sourcing of funds and fears that public money is still being used despite IMF objections.

Bitcoin Office Still Active, Volcano Bonds Still Theoretical

Government Promises Continue While Private Sector Withers

The state’s Bitcoin Office remains active on social media, and plans for Volcano Bonds—a tokenized sovereign debt product backed by Bitcoin and supported by Tether—are still technically on the table.

However, these bonds have been delayed multiple times and have not progressed past the announcement phase.

Outside of Chivo and a handful of licensed platforms like Bitget, there’s little evidence of a vibrant or growing crypto sector. Most of the registered firms that were expected to fuel innovation and jobs have either failed to launch or gone dormant.

The Harsh Reality for Bitcoin in El Salvador

Grand Vision Meets Execution Deficit

El Salvador’s Bitcoin story is a textbook example of the challenges in scaling national-level crypto policy:

• The vision was bold and disruptive.

• The execution has fallen short.

• The results, three years in, are mixed at best—and troubling at worst.

What remains is a government still championing Bitcoin in word, but a local business landscape where nine out of ten registered crypto firms have effectively vanished.

The implication is clear: symbolic policy does not equal structural transformation. Without functional infrastructure, regulatory balance, and real-world adoption, national crypto policy risks becoming little more than political theater.

CEO Takeaway: Lessons for Other Governments Eyeing Bitcoin Adoption

El Salvador’s Experience Offers a Crucial Cautionary Tale

For policymakers, regulators, and CEOs in the crypto and fintech space, El Salvador’s Bitcoin rollout offers several key lessons:

1. Regulatory clarity matters—but must be proportional to the market’s maturity.

2. Startups need support, not just compliance hurdles.

3. Public enthusiasm can’t substitute for institutional readiness.

4. National adoption strategies must balance symbolism with substance.

El Salvador hasn’t abandoned Bitcoin—but with only 20 operational crypto providers and little evidence of ecosystem vitality, it’s clear the country’s crypto revolution has hit a serious wall.

As global interest in state-backed crypto strategies continues to grow, El Salvador may serve as both inspiration and warning.

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