Living in El Salvador became much more attractive to cryptocurrency holders when the government declared Bitcoin a legal tender in the country. To support its use, the government has supplied citizens with multiple pieces of infrastructure such as Bitcoin ATMs and a mobile wallet named "Chivo". Despite this, reports are claiming that the Chivo wallet has been flagging and freezing wallets that have received transactions from Wasabi – a non-custodial bitcoin wallet that obscures onchain transaction monitoring.

The issue was highlighted by the founder of El Zonte’s Bitcoin Beach, Mike Peterson, who explained that the government is likely bowing to pressure from the US to take action against privacy-focused wallets. He urged bitcoin holders to push back against the Chivo wallet software in order to protect people who are trying to make use of the technology as intended. Reports also suggested that wallet users who have funds flagged and frozen must provide documentation on the origin of the money.

Not everyone agrees with the claims that Chivo is blocking Coinjoin transactions originating from Wasabi. A Twitter user contended that they had sent post-mix coins to Chivo addresses without any problems. Nevertheless, this dispute reignites the debate on the potential implications of privacy-focused wallets on the blockchain and the lengths governments are willing to go to in order to regulate the usage of cryptocurrencies.

Meanwhile, the Bitcoin Beach Twitter account states that El Salvador is still the easiest place to live on a bitcoin standard. Despite the friction certain users have faced with regards to using the Chivo wallet, the benefits that come with it may still outweigh the consequences. As more citizens look to transition to a bitcoin based economy, the government must take the necessary steps to ensure that laws and regulations protect users and their funds.



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