El Salvador's 2021 Bitcoin legal-tender experiment

On 8 June 2021, El Salvador's Legislative Assembly passed the Ley Bitcoin, making it the first country in the world to adopt bitcoin as legal tender alongside the US dollar; the law took effect on 7 September 2021. Banco Central de Reserva de El Salvador was tasked with writing the technical rules implementing the law, covering how merchants, exchange houses and the state-run Chivo wallet would convert between bitcoin and dollars and how tax obligations denominated in bitcoin would be handled. The stated goals were to cut remittance costs for Salvadorans abroad, who send home a sum equivalent to a large share of GDP each year, and to attract crypto-related investment and tourism. In practice, adoption by ordinary merchants and households stayed low, bitcoin's price volatility complicated its use as a unit of account, and the IMF repeatedly flagged the law as a source of fiscal and financial-stability risk during its Article IV consultations, making rollback of mandatory bitcoin acceptance a condition attached to further Fund engagement. El Salvador amended the law in early 2025, removing bitcoin's status as mandatory legal tender for private businesses, though the government's bitcoin holdings and voluntary use of the currency remained in place.