President of El Salvador: BTC legalization has not been a resounding success

What’s new? El Salvador’s President Nayib Bukele has said in an interview with TIME that the adoption of bitcoin has shown mixed results so far. The country was the first in the world to legalize BTC as a means of payment in 2021, with authorities later beginning to regularly invest in the asset. Bukele noted that so far BTC has not been as widespread as expected.

Material by TIME

What else is known? Although, according to Bukele, the first cryptocurrency is used by many Salvadorans and most large local companies, the scale of adoption has not reached the expected level since its legalization. However, he emphasized that the authorities have never forced the population to use BTC, and El Salvador remains a free country in all respects.

The bitcoin legalization law was passed on September 7, 2021, at the height of the bull market. It aims to digitize the economy and reduce reliance on the US dollar, which is the most widely used currency in El Salvador.

Officials then allocated $75 million to give away $30 each in BTC to new users of the state crypto wallet Chivo. Bitcoin also became a long-term treasury asset, officials invested in it regularly, and on November 18, 2022, they began buying one coin each day.

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One year after the legalization of bitcoin, Barrons published a poll, according to which 77% of Salvadoran citizens were against spending the state budget to buy cryptocurrency. 75,6% of respondents did not use digital assets at all in 2022. At the same time, the IMF criticized officials for threatening El Salvador’s financial stability and refused to give the country a loan as long as bitcoin has legal status. The organization recommended caution due to the “speculative nature” of the crypto market.

Despite this, the country launched the National Bitcoin Office (ONBTC) in late 2022 to manage crypto projects. Officials noted a significant increase in tourist traffic to El Salvador, and El Salvador’s Vice President Felix Ulloa in October 2023 cited the legalization of BTC as the main reason for the country’s economic growth.

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At the end of 2023, El Salvador launched a citizenship program for crypto investments of $1 million in partnership with Tether, which issues the largest USDT stablecoin pegged to the US dollar in the crypto market. The program is open to 1000 people annually, not including their family members. In addition, Tether’s parent company, iFinex, joined the country’s crypto regulation development.

This year, IMF officials acknowledged that their fears of bitcoin legalization in El Salvador were not justified.

In a new interview with TIME, Bukele emphasized that citizens who have chosen to use bitcoin as a means of savings have made significant profits, as the asset’s exchange rate is once again approaching an all-time high.

He pointed to the growing presence of Wall Street firms in the crypto industry, and the fact that bitcoin is becoming a significant component of US presidential candidates’ election campaigns.

“I’m not going to say it's the currency of the future, but there’s a lot of future in that currency,” Bukele said.

Bukele noted that despite limited success in distribution within the country, bitcoin has improved El Salvador’s “branding,” attracted foreign investment and led to an increase in tourism. Several bitcoin companies have offices or headquarters in the country.

“In the end, the fact of being a ‘First Mover,’ I think, gives us a small advantage, as far as it goes. I feel that it could have been much better. I wouldn’t consider it a resounding success. Still, I do believe that the positive outcomes outweigh the negative, and the issues that have been highlighted are relatively minor,” the president concluded.

According to the data of the meme pool launched by ONBTC, the government owns 5 857,76 BTC worth nearly $348.8 million at the time of writing.