El Salvador’s enthusiastic governmental push for Bitcoin encountered a surprising setback in 2023 as cryptocurrency payments sharply declined, despite widespread promotion and Bitcoin’s price surge. The Central Bank of El Salvador reported a significant drop in remittances, with funds sent from Salvadorans abroad to local relatives plummeting from $116.4 million in 2022 to $82.93 million in 2023. This decline starkly contrasts with the overall family remittance figure, which rose to a historical high of $8,181.8 million, marking a 4.6% increase from the previous year.
Official data reveals that Salvadorans sent over $30 million less in crypto compared to the previous year, with only 1% of total remittances made in cryptocurrency throughout 2023—worse than the 1.7% recorded in 2022. Despite the aggressive Bitcoin integration campaigns led by President Nayib Bukele, in collaboration with figures like Max Keiser and major exchanges such as Binance, the public’s embrace of Bitcoin appears lukewarm. A recent survey indicated that 88% of the population did not utilize the cryptocurrency in 2023, and interest seems to diminish over time.
The financial practices related to Bitcoin under the Bukele administration have faced criticism due to their secretive nature. The lack of transparency regarding Bitcoin purchases, actual holdings, and wallet addresses has fueled controversy. This opacity has intensified the political atmosphere in El Salvador, where Bukele holds significant control over the government, congress, courts, and political institutions. Bukele’s governance, marked by controversial decisions such as extending his presidency beyond constitutionally allowed terms and enforcing a state of emergency to combat gang activity, reflects a prioritization of swift action over deliberation and transparency.
The paradox lies in El Salvador’s remittance landscape, which has witnessed substantial growth in traditional banking channels and alternative remittance methods, challenging the notion that Bitcoin would revolutionize money transfers for Salvadorans. Despite being a pioneer in Bitcoin adoption, El Salvador stands relatively alone on the global stage. Attempts by other nations, like the Central African Republic, to declare Bitcoin as legal tender met with failure shortly after their inception.
Venezuela, another politically tumultuous country, legalized cryptocurrency as a means of payment. However, the country’s official token faces a potential shutdown as crypto adoption experiences a sharp decline after the government lifted restrictions on the dollar, linking official rates with those from the black market. The complex interplay of Bitcoin, governance, and public sentiment in El Salvador highlights the challenges and contradictions in the pursuit of cryptocurrency adoption at the national level.
