Nayib Bukele.

Before the Bitcoin Law

Nayib Bukele ran an advertising company in San Salvador before he went into politics, according to a profile by CIDOB, a research centre in Barcelona. He was elected mayor of the small town of Nuevo Cuscatlán in 2012, and of the capital, San Salvador, in 2015, for the left-wing FMLN party, which expelled him in 2017. Standing for another party, he won El Salvador’s presidential election in February 2019 with nearly 54% of the vote, the Associated Press reported, and took office on 1 June.⁠^[1][2]

El Salvador had used the US dollar as its currency since 2001. Money sent home by Salvadorans working abroad, known as remittances, came to nearly a quarter of the economy, and about 70% of people had no bank account, Bukele said. On the Pacific coast, the village of El Zonte had been using bitcoin widely since about 2019, helped by a large donation from an anonymous investor. Bukele cited this “Bitcoin Beach” as proof that the idea could work for the whole country, Al Jazeera reported.⁠^[11][3]

The Bitcoin Law

On 5 June 2021 a video of Bukele was shown at the Bitcoin 2021 conference in Miami. He said he would send Congress a bill the next week to make bitcoin legal tender: money that must be accepted to settle a debt. “In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” he said. Late on 8 June the Legislative Assembly passed it by 62 votes of 84. “62 out of 84 votes! History!” Bukele posted.⁠^[3][5][6]

The law made bitcoin legal tender alongside the dollar, with no limit on the debts it could settle. Its Article 7 required every business to accept bitcoin when a customer offered it, unless, under Article 12, it plainly had no access to the technology. Taxes could be paid in bitcoin, and the state promised to swap bitcoin for dollars instantly through a trust at a state development bank, backed by $150 million. Bukele presented it as a choice for ordinary people, because payments could be turned into dollars automatically: “The use of bitcoin will be optional, nobody will receive bitcoin if they don’t want it,” he said.⁠^[7][14][8]

His main argument was remittances. Salvadorans paid $400 million a year in fees on the money sent home, he said, and bitcoin would save them that, while giving people without bank accounts access to financial services. The day after the vote he told LaGeo, the state geothermal power company, to plan bitcoin mining powered by “very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos”.⁠^[10][9]

Chivo, purchases and Bitcoin City

The law took effect on 7 September 2021. The government’s Chivo wallet app gave $30 in bitcoin to everyone who signed up, and Chivo cash machines let people turn bitcoin into dollars without fees. On the first day the app disappeared from app stores, then was taken offline while servers were added; Bukele asked people on Twitter to report any errors. “Not everything will be achieved in a day, or in a month,” he wrote. More than 1,000 people marched against the law in San Salvador, Reuters reported. One student’s sign read “No to Bitcoin, No to Dictatorship”.⁠^[10][11][17]

The state also bought bitcoin, and Bukele announced the purchases himself. “We now hold 400 #bitcoin,” he posted on the eve of the launch. In November 2022 he wrote: “We are buying one #Bitcoin every day starting tomorrow.”⁠^[12][13]

In November 2021, at a bitcoin conference on the Salvadoran coast, he announced plans for a “Bitcoin City” at the foot of the Conchagua volcano, powered by geothermal energy and free of income and property taxes. It would be paid for with a $1 billion “volcano bond”, half of it spent on bitcoin, Samson Mow of the bitcoin company Blockstream said on stage. The government postponed the bond several times. In January 2023 lawmakers passed a Digital Assets Issuance Law to allow it, but the IMF loan agreed in 2025 barred the state from issuing any debt tied to bitcoin.⁠^{[14][15][16][24]}

The IMF deal

The International Monetary Fund (IMF), which lends to governments in financial difficulty, warned against the law from the start. In January 2022 its board said making a cryptocurrency legal tender “entails large risks for financial and market integrity, financial stability, and consumer protection”, and urged El Salvador to remove bitcoin’s legal tender status. Bukele went on to win a second term in February 2024 with about 83% of the vote in early results, after a 2021 ruling by the constitutional court, “dominated by his supporters” in the BBC’s words, allowed a president to stand again.⁠^[20][30][29]

In December 2024 El Salvador reached a staff-level agreement with the IMF on a 40-month loan of about $1.4 billion. Under it, “acceptance of Bitcoin by the private sector will be voluntary and public sector’s participation in Bitcoin-related activities will be confined.” On 29 January 2025 lawmakers changed the Bitcoin Law at Bukele’s request. Only people and private businesses may now accept bitcoin, and they no longer have to; taxes can no longer be paid in it; and the state’s duty to convert bitcoin to dollars is gone. The law still calls bitcoin “curso legal”, legal tender, but no longer “moneda”, currency. The IMF board approved the loan on 26 February 2025.⁠^[21][22][24]

Sources disagree on what is left. EFE, the Spanish news agency, reported that the reform erased references to bitcoin as legal-tender currency, and the IMF said it removed “the essential features of legal tender”. Stacy Herbert, the American director of El Salvador’s National Bitcoin Office, said bitcoin remained legal tender.⁠^[23][24]

The loan terms set a ceiling of zero on any voluntary addition to the state’s bitcoin. Bukele said the buying would go on: “No, it’s not stopping. If it didn’t stop when the world ostracized us and most ‘bitcoiners’ abandoned us, it won’t stop now.” Michael Saylor, the chairman of Strategy, a company that also buys bitcoin, replied on X: “Bitcoin adoption is unstoppable.” In its first review that June the IMF said increases in the state’s holdings reflected “the consolidation of Bitcoin across various government-owned wallets”.⁠^{[24][25][26][31]}

In October 2026 the IMF granted waivers after El Salvador missed targets “on the Bitcoin accumulation front”. It said majority ownership and control of Chivo had passed to a private operator, and that no further accumulation was envisaged “beyond the documented donations”. On 18 October 2026 the addresses listed on the National Bitcoin Office’s public tracker held about 7,808 bitcoins, and one of them had received a deposit of exactly one bitcoin on most days since March 2026.⁠^[27][28]

Did it work?

Few Salvadorans took to bitcoin. In a survey of 1,800 households in February 2022, the economists Fernando Alvarez, David Argente and Diana Van Patten found that “only 20% of all respondents continued using Chivo after spending their bonus”, and that 20% of firms accepted bitcoin. In a poll by the Central American University at the end of 2024, 91.8% of people said they had not used it that year. Less than 2% of remittances went through bitcoin providers, the IMF found, and it said in 2023 that bitcoin had had “a minimal impact on financial inclusion”.⁠^[18][19][32]

Critics also objected to how it was done. “The law was adopted extremely quickly, without a technical study or a public debate,” the Salvadoran economist Ricardo Castaneda told The Guardian in 2021. The World Bank turned down a request to help, citing “environmental and transparency shortcomings”, and the ratings agency Moody’s downgraded El Salvador’s debt. An August 2021 poll by the Central American University found 65% of people opposed the law, though it gave Bukele an approval rating of 76%.⁠^{[33][34][10][11]}

Supporters made the opposite case. Jack Mallers, the founder of the bitcoin payments app Strike, who introduced Bukele’s video in Miami, called the plan “the shot heard ’round the world for Bitcoin”. In January 2022 Bukele said 4 million people, in a population of 6.5 million, were using Chivo. And in El Zonte, an Uber driver who had learned about bitcoin there told Al Jazeera on the day the law took effect: “The price might go up or down, but Bitcoin gives me more power. We don’t need permission to send money anymore.”⁠^[4][35][11]