El Salvador Becomes First Country to Revoke Bitcoin’s Legal Tender Status: A Major Shift in Cryptocurrency Policy

In a historic pivot, El Salvador has become the first nation to repeal its Bitcoin legal tender status, marking a significant change in the cryptocurrency landscape. This shift follows the passage of an amendment by the Salvadoran Congress, which is dominated by the ruling party, to alter the “Bitcoin Law.” The move comes in response to mounting pressure from the International Monetary Fund (IMF), which tied the approval of a crucial $1.4 billion loan to the country’s need to address the financial risks associated with Bitcoin.

Effective immediately, Bitcoin is no longer classified as a currency, allowing businesses the option to opt-out of accepting Bitcoin for transactions. Additionally, the government has ceased its acceptance of Bitcoin for tax payments. The ruling party’s decision to amend the law has been largely underreported, despite the high-profile nature of President Nayib Bukele on social media platforms.

This amendment illustrates a broader trend of regulatory caution surrounding cryptocurrency, underscoring the need for governments to balance innovation with financial stability as global economic conditions evolve.