El Salvador, the first country to adopt Bitcoin as legal tender in 2021, has reversed its decision under pressure from the IMF. The law made Bitcoin mandatory for transactions, with merchants required to accept it and the government collecting payments in Bitcoin. However, the law faced opposition from the public, with many lacking trust in Bitcoin and opposed to its adoption. There were also issues with merchants' ability to accept Bitcoin and the currency's volatility. While the adoption of Bitcoin led to an increase in tourism, it failed to serve as a hedge against inflation and did not significantly improve financial inclusion. The timing of the law, just before a crypto crash, also discouraged Salvadorans from using Bitcoin. In exchange for a $1.4 billion loan from the IMF, El Salvador agreed to revise the law, removing Bitcoin as legal tender. Businesses will now have the option to accept or refuse Bitcoin payments, and the cryptocurrency will no longer be accepted for taxes or government payments. The IMF loan will be disbursed over three years, potentially leading to a decline in Bitcoin's role in the country. However, El Salvador's government continues to maintain its pro-crypto stance, as evidenced by recent Bitcoin purchases.



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