Bitcoin’s Declining Role in El Salvador’s Remittance Market: A Shift from 5% to Below 1%

According to recent information from Bitcoin.com, the Central Bank of El Salvador has reported a significant decline in cryptocurrency remittances, which have remained below 1% of the total since October 2024. This marks a stark drop from the nearly 5% recorded in October 2021 when Bitcoin was officially adopted as legal tender. Financial analyst John Paul Koning noted the disparity between this low adoption rate and President Nayib Bukele’s claims that conventional financial services impose fees as high as 25% on remittances. In contrast, the government’s digital wallet, Chivo, promotes zero transaction fees; however, the anticipated boom in cryptocurrency transactions among a largely dollarized populace has yet to materialize. Furthermore, to comply with an agreement with the International Monetary Fund (IMF), the Salvadoran government plans to either terminate the operations of Chivo or sell it, along with revoking Bitcoin’s status as legal tender, further diminishing its economic influence.