Bitcoin News Today: El Salvador's Bitcoin Reserve Fails to Benefit Citizens Despite $760M Holdings 80% Report No Improvement

El Salvador’s Bitcoin reserve, established in 2021 to diversify foreign exchange holdings and promote financial inclusion, has failed to deliver tangible benefits to the general population, despite continued government accumulation of the cryptocurrency. The Central American nation’s adoption of Bitcoin as legal tender—initially hailed as a bold step toward financial innovation—has been hampered by limited public education, regulatory constraints, and a lack of private sector adoption. Quentin Ehrenmann, general manager at My First Bitcoin, highlighted that the government’s focus on expanding its Bitcoin holdings has prioritized symbolic gestures over practical measures to improve economic conditions for citizens. He noted that the country’s 2024 loan agreement with the International Monetary Fund (IMF) further restricted Bitcoin initiatives, requiring El Salvador to suspend new cryptocurrency purchases and halt its legal tender status. This has left the reserve as a government-held asset with minimal public access, exacerbating the disconnect between policy goals and real-world impact [1].

The IMF agreement, part of a $1.4 billion financial assistance program, has effectively curtailed public sector involvement in Bitcoin. By January 2025, El Salvador’s legislature reversed its legal tender designation, rendering Bitcoin optional in private transactions and eliminating the ability to pay taxes in the cryptocurrency. A July 2025 report confirmed that increases in government Bitcoin wallet balances resulted from internal transfers rather than new market purchases, contradicting President Nayib Bukele’s earlier claims of daily accumulation [1]. This lack of transparency has fueled skepticism about the program’s efficacy and raised questions about accountability.

While the government’s Bitcoin reserves, valued at over $760 million by mid-2025, represent a significant asset, their utility for economic development remains questionable. Research indicates that only 20% of businesses adopted Bitcoin by 2022, and just 1.9% of remittance payments used the cryptocurrency between September 2021 and April 2022. A 2024 survey revealed that 80% of Salvadorans felt Bitcoin had not improved their financial conditions, underscoring public disillusionment. The absence of state-led education programs and regulatory frameworks has stymied private sector adoption, leaving businesses and consumers without incentives to integrate Bitcoin into daily transactions [2].

The IMF’s insistence on limiting public sector Bitcoin exposure reflects broader concerns about cryptocurrency’s risks to fiscal stability. International financial institutions remain wary of national Bitcoin strategies lacking transparency and regulatory safeguards. El Salvador’s compliance with these restrictions highlights the tension between cryptocurrency innovation and traditional financial oversight. The privatization of the state-run Chivo wallet by July 2025 and the dissolution of Fidebitcoin—the trust fund guaranteeing Bitcoin-dollar conversions—signal a retreat from the country’s original ambitions. These measures underscore how access to traditional financing mechanisms remains a priority for developing nations over experimental crypto policies [1].

El Salvador’s experience offers cautionary lessons for countries considering Bitcoin adoption. The failure to bridge the gap between government-held reserves and public benefits underscores the importance of infrastructure, digital literacy, and trust in any cryptocurrency initiative. Critics argue that resources allocated to Bitcoin could have been redirected to address pressing issues like inflation, poverty, and unemployment. As the initiative enters its fifth year, calls for reevaluation have grown, with advocates urging a transparent audit of the reserve’s performance and a shift toward inclusive economic policies [2].

Source:

[1] [El Salvador's Bitcoin reserve only helps the government and not normal residents of the Central American country, according to one BTC advocate] [https://cointelegraph.com/news/el-salvador-bitcoin-reserve-help-people]

[2] [El Salvador's Bitcoin reserve fails to help the average citizen — NGO exec] [https://www.coingecko.com/en/coins/yield-optimizer-eth]

[3] [El Salvador's Bitcoin gamble pays off as reserves surge past $760mn] [https://www.intellinews.com/ukrainian-president-zelenskiy-backtracks-on-law-enforcement-bill-following-mass-protests-392881-]

[4] [IMF urges El Salvador to remove bitcoin as legal tender] [http://thedailytouristbd.com/]