Shockingly, Almost All Bitcoin Businesses in El Salvador Ghosted the Market

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El Salvador’s headlong dive into Bitcoin has resulted in what analysts might call a “mild hiccup,” and what locals might describe as “where did they all go?” Apparently, almost every crypto outfit the country proudly registered decided that following the rules is optional—like a gym membership in January.

According to El Mundo, borrowing stats from the Central Reserve Bank like a nosy neighbor, out of 181 officially sanctioned Bitcoin businesses, a staggering 161 have ghosted the scene. That’s approximately 89%, or as I like to say, 161 firms playing a very impressive game of hide-and-seek. Only 20 remain, including the government’s pet project, Chivo Wallet, which sounds more like a new tequila brand than a cryptocurrency platform.

El Mundo delicately points out that at least 22 of these no-shows may have flunked the country’s Bitcoin standards on “integrity and honesty.” In crypto-speak, that means they were supposed to have anti-money laundering hustle, neat records, and cybersecurity strong enough to keep hackers at bay—or at least entertained. Turns out, those are big asks when you’re juggling bitcoin and bureaucracy.

The audacity of breaking old habits

Flashback to 2021: El Salvador decided to turn the global financial establishment upside down by making Bitcoin legal tender. Nayib Bukele, who styles himself as the “CEO of El Salvador” (because why run a country when you can run a startup?), promised it would lure tech investors, lower remittance fees, and bank the unbanked. All very Silicon Valley-meets-Caribbean boutique hotel stuff.

“Como toda innovación, el proceso del #Bitcoin en El Salvador tiene una curva de aprendizaje. Todo camino hacia el futuro es así y no se logrará todo en un día, ni en un mes.

Pero debemos romper los paradigmas del pasado. El Salvador tiene derecho a avanzar hacia el primer mundo.”

— Nayib Bukele (@nayibbukele) September 6, 2021

They even launched a digital wallet named Chivo (which means “Cool,” or “Goat,” depending on your cryptocurrency wisdom) and handed out a $30 Bitcoin bonus like candy at a parade. What could go wrong?

Turns out, quite a bit. Users grappled with technical glitches, adoption was about as enthusiastic as a teenager forced to attend a family reunion, and within a year, most Salvadorans had tossed the thing aside like a failed science experiment.

Hon Ng, legal brainchild at crypto exchange Bitget (who also snagged a license here, so he knows the playground rules), told crypto.news the abandoned Bitcoin businesses underline “massive challenges” with the rollout. It seems El Salvador’s vision to become a “crypto hub” is slightly hampered by the fact that most of these companies lack the stamina to stay open or the paperwork to pretend otherwise.

“With over 88% of Bitcoin-related companies still non-operational, it’s evident there are infrastructure and institutional hurdles. While legislation shows ambition, the reality needs a reboot.”

— Hon Ng

The IMF’s enthusiastic thumbs down

By 2022, the International Monetary Fund (IMF) was making it crystal clear they weren’t exactly sending Bitcoin-themed care packages. The Bitcoin Law threw a wrench into El Salvador’s plans for a $1.3 billion bailout, prompting the IMF to suggest quietly that maybe, just maybe, Bitcoin shouldn’t have the same status as the dollar. A bit like telling a toddler they can’t have ice cream for breakfast.

After an initial “No way, José,” the government slyly dismantled Bitcoin’s legal tender teeth. Businesses no longer had to accept it, and the state could step back from transactions like it was a failed Tinder date. Still, Bukele hasn’t abandoned his crypto love affair, boasting of a Bitcoin stash worth over $500 million but keeping the funding sources on a “need-to-know” basis.

More questions than answers (and fewer active wallets than hoped)

With almost 90% of providers playing crypto dead, no one’s quite sure what that means for El Salvador’s blockchain future. Hon Ng suspects it’s a weird mashup of legal expectations meeting harsh business realities, a bit like expecting your cat to start paying rent.

“While the law is progressive, it overlooks how startups and mid-sized financial entities actually operate here.”

— Hon Ng

He adds that many firms don’t have the resources to build state-of-the-art cybersecurity or keep up with “regulatory ambiguity,” leaving them stuck in limbo or just quietly closing doors. It’s like starting a band with great ideas but no instruments.

“Optimism at day one can quickly morph into inaction when the practical challenges pop up.”

— Hon Ng

The government’s Bitcoin Office is still hawking crypto dreams online, and the infamous Volcano Bonds—Bitcoin-backed token bonds, because normal bonds were too boring—are still “in the pipeline,” though that pipeline seems more like a leaky faucet at this point. Besides Chivo and a few hardy private ventures, the crypto ecosystem looks about as lively as a deserted beach at midnight.

Bottom line: El Salvador’s Bitcoin adventure isn’t over, but after nearly three years, it’s more “crypto tumbleweed” than “crypto gold rush.”

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2025-04-20 12:24