President Donald Trump's proactive stance on digital assets has significant l influenced the global cryptocurrency landscape recently. On March 6, 2025, Trump signed an executive order establishing a Strategic Bitcoin Reserve, positioning the United States as a leader in cryptocurrency management. This controversial decision led to a fall in Bitcoin's value by roughly 5%, although it has since recovered. Additionally, the administration has appointed David Sacks as a "crypto czar"; and is hosting the first-ever crypto summit at the White House, further highlighting its dedication to embracing financial innovation.
Elsewhere in the world Bitcoin has already been welcomed with open arms. El Salvador's pioneering decision to adopt Bitcoin as a legal tender seems pertinent to review now as the crypto world evolves under the return of the Trump administration.
El Salvador, a Central American country with a population of approximately 6.31 million people, adopted Bitcoin as legal tender on the 1st of September 2021. Nayib Bukele, the president, hoped that integrating Bitcoin into the economy would help modernise the economy, encourage foreign investment, and ensure that a wider portion of the population had access to financial services.
A fifth of El Salvador’s GDP is from money sent into the country as remittance payments. A dependence on remittance was unsustainable for the economy, as the high transaction costs using services from firms like Western Union and the lack of a continuous banking system only reduced the number of remittance payments made into El Salvador’s economy. Bitcoin wouldn’t have these problems, as most trading platforms only require a phone with a data plan, which is more feasible for the average citizen. Additionally, adopting Bitcoin would reduce the transfer speeds from remittance payments.
To facilitate the widespread adoption of Bitcoin, Nayib Bukele and his government launched two main initiatives.
1. The Chivo Wallet – a government-backed wallet and exchange. It allows Salvadorans to manage Bitcoin, whether to send, receive or store it. Toencourage citizens to sign up, $30 worth of Bitcoin was included as a bonus.
2. Bitcoin ATMs – hundreds of these were installed nationwide to allow citizens to access the same services as Chivo Wallet, even if they didn’t have 24/7 access to a smartphone.
Looking on from 2021, when this initiative was put in place, El Salvador is in a fairly rough position regarding their adoption of Bitcoin. Concerns over the inherent volatility of cryptocurrency, mixed with citizen’s preferring to stick with the main currency of the US dollar, led to low adoption rates across the country. Combining that with the several issues the Chivo Wallet faced and criticism from the International Monetary Fund that this decision would destabilise the economy, it's clear that the whole initiative may have been doomed from the start.
Only recently did the IMF order the shutdown and liquidation of the Chivo Wallet in exchange for a $1.4 billion loan for El Salvador, which still falls short of the $1.6 billion cost of adopting Bitcoin. This decision did not affect Bitcoin’s status as legal tender, and the government plans to continue acquiring BTC for its reserves. Additionally, businesses are no longer required to accept Bitcoin, and El Salvador is now required to disclose all public-sector Bitcoin holdings and conduct independent audits to enhance transparency.
El Salvador’s Bitcoin experiment remains one of the most daring financial decisionsof the 21 st century and proves to be an interesting ongoing case study. However, the cost of gaining international recognition and respect from the cryptocurrency community will be forever felt in what was already such a fragile economy. The recent decision of President Trump will genuinely prove whether a path like this is feasible for more advanced economies or whether this gambit will serve as a warning for future leaders.