Crypto Remittances to El Salvador Plummet 45% in 2024

Crypto remittances to El Salvador have experienced a significant decline, with a 45% decrease in the first four months of 2024 compared to the same period in 2023. This drop is particularly notable given that El Salvador became the first country to adopt Bitcoin as legal tender in 2021. The volume of remittances processed through crypto means fell by 44.5% during Q1 2025 compared to what was sent to the country in the first four months of 2024. Salvadorans only received $16 million in crypto during this period, a sharp decline from the $28.83 million during the same period last year.

The reduction in crypto remittances volumes has become a trend, failing to gain momentum as financial institutions, incumbents in the business, still have the preference of the Salvadorans despite the fees associated with their activities. During this first quarter, crypto failed to even reach 1% of the total inflows received by Salvadorans. It only comprised 0.52% of over $3 billion sent to the country between January and April.

Analysts and local press claim that the recent abandonment of bitcoin as legal tender and the recent “confinement” of bitcoin from the public sector might have influenced these results. Salvadorans might understand that crypto and bitcoin are being displaced from the country, so fewer people are incentivized to leverage these alternatives instead of the tried and true methods proposed by incumbents. Also, the arranged dissolution of Chivo Wallet, a state-promoted wallet that could be used for remittances, might have influenced these numbers, as citizens have fewer government-sanctioned rails to complete these transactions.

President Bukele was one of the promoters of the remittance use case for crypto, stating that it would help retake the over $400 million that Salvadorans pay in remittance fees each day. Nonetheless, this has failed to happen, and its utilization has been trending down since its all-time high in October 2021, when crypto represented 5% of all remittance inflows. The decline in crypto remittances highlights the challenges and uncertainties that come with integrating cryptocurrencies into the financial system. The decrease could be attributed to various factors, including fluctuations in the value of Bitcoin, regulatory hurdles, and the general volatility associated with digital currencies. Despite the government's efforts to promote the use of Bitcoin, the public's trust and adoption of the cryptocurrency remain limited. The situation underscores the need for more stable and reliable financial solutions to support remittances, which are a crucial source of income for many families in El Salvador. The government may need to reconsider its approach to cryptocurrency adoption and explore alternative methods to ensure the stability and reliability of remittance flows.