Published May 22, 2026 · By Editorial Team · 8 min read

El Salvador After the Bitcoin Law Repeal: Voluntary Acceptance, Continued Adoption

El Salvador's Legislative Assembly voted on January 29, 2025 to repeal the mandatory acceptance provisions of the 2021 Bitcoin Law, taking effect February 1, 2025. The reform, prompted by a $1.4 billion IMF Extended Fund Facility, converted Bitcoin from legal tender to voluntary payment method while preserving the state's Bitcoin reserves and the Chivo Wallet infrastructure. Fifteen months later, the country's relationship with crypto-gambling reflects the changed but not extinguished structural commitment.

What happened

El Salvador adopted Bitcoin as legal tender via the Bitcoin Law passed June 2021 under President Nayib Bukele's first administration. The law required all businesses to accept Bitcoin as payment subject to technological capacity. The Chivo Wallet, a government-issued mobile app, was launched September 2021 with a $30 sign-up incentive funded by state Bitcoin reserves.

The IMF and El Salvador had been in extended negotiations through 2022 to 2024 regarding macroeconomic support contingent on policy adjustments. The IMF's principal objection to the Bitcoin Law was the financial stability risk of mandatory acceptance combined with public-sector Bitcoin exposure. The Extended Fund Facility agreed in December 2024 specified Bitcoin policy reforms as conditions, with the Legislative Assembly passing the implementing amendments on January 29, 2025.

The February 1, 2025 amendments converted Bitcoin from mandatory legal tender to voluntary payment method. Businesses are no longer required to accept Bitcoin. The Chivo Wallet continued operating but with reduced state-direct subsidisation. The state's Bitcoin reserves, accumulated through approximately 6,200 BTC purchased between 2021 and 2024 (worth approximately $475 million at April 2026 prices), were retained.

Bukele's social media communications throughout 2025 confirmed continued state Bitcoin acquisition strategy under the "1 BTC per day" framework, with publicly tracked reserve growth despite the legal-tender repeal. Through the first quarter of 2026, the state has continued small-scale Bitcoin acquisitions while complying with the IMF conditions regarding public-sector exposure ceiling.

The CNAD (Comisión Nacional de Activos Digitales), El Salvador's digital asset regulator established in 2022, has continued operating with expanded responsibilities post-repeal. CNAD has registered approximately 50 virtual asset service providers and 30 digital asset issuers as of Q1 2026, including major exchanges and several crypto-financial-services firms operating from El Salvador as a regulatory base.

Why it matters

El Salvador's structural significance to the global crypto-gambling industry was never about its small domestic market — the country has approximately 6.3 million residents and modest gambling sector. Its significance was its regulatory positioning. The CNAD framework provided a credible, English-language, IMF-coexistent regulatory base for crypto-financial-services firms seeking explicit legal authority outside traditional financial-services regulatory perimeters.

The legal-tender repeal does not affect the CNAD framework's operational viability. Crypto businesses that registered as VASPs or digital asset issuers in El Salvador continue under their existing authorisations. Bitfinex Securities El Salvador, a notable early registrant, has operated tokenised securities offerings from the jurisdiction. Several other entities including custodians, exchanges and trading-related services maintain Salvadoran registration.

For crypto-gambling specifically, El Salvador has not become a gambling licensing jurisdiction. The country's domestic gambling regulation under the Ley de Casinos y Casas de Juegos de Azar applies to land-based casino operations under Defense Ministry oversight. Online gambling is not explicitly regulated; offshore operator access by Salvadoran residents occurs without domestic licensing or supervision.

The structural relevance is the demonstration effect. El Salvador's continued state-level Bitcoin commitment despite the legal-tender repeal signals that the political project did not depend on the specific mandatory-acceptance provisions. For other Central American and Latin American jurisdictions considering crypto-friendly regulatory positioning, the El Salvador experience indicates that comprehensive crypto frameworks can coexist with IMF programmes — a useful precedent for cash-strapped governments evaluating crypto-asset regulatory expansion.

The Chivo Wallet's status post-repeal is also informative. Despite reduced state subsidisation, the wallet continued operating with approximately 4.2 million registered users by Q4 2025 (per Banco Central de Reserva reporting). Active monthly usage declined from peak 2022 levels but remained significant. The wallet's continued operation indicates that Bitcoin payment infrastructure can persist at meaningful scale even without legal-tender backing.

Who is affected

Salvadoran residents face minimal direct impact on their crypto-gambling activity. The structural drivers of crypto-gambling demand in El Salvador — dollar-denominated remittances (approximately 23% of GDP from US-based diaspora), banking infrastructure limitations for lower-income segments, and growing smartphone-mediated financial activity — remain unchanged. Players accessing offshore operators via crypto deposits continue to do so without legal-tender-related disruption.

Crypto-financial-services firms operating under CNAD registration continue with their existing authorisations. The regulatory framework's credibility was not undermined by the legal-tender repeal; if anything, the IMF-coexistent character of the post-repeal CNAD framework strengthens its standing among traditional financial counterparties. Salvadoran-registered VASPs can engage with US correspondent banks and EU counterparties with somewhat reduced AML concern.

IMF Extended Fund Facility implementation has proceeded on schedule. The $1.4 billion programme has disbursed in tranches against quarterly targets, with the legal-tender repeal serving as the headline conditional reform. Subsequent disbursements depend on broader fiscal consolidation and structural reforms; Bitcoin policy is no longer the principal contentious element.

The state's Bitcoin reserves represent a meaningful unrealised gain at current prices. The approximately 6,200 BTC accumulated below an average cost of $40,000 has appreciated to approximately $475 million versus a cost basis of approximately $250 million. The political and fiscal implications of the reserves — whether to monetise, retain or expand — will be policy choices through the remainder of Bukele's second term.

The Volcano Energy bond, a planned dollar-denominated Bitcoin-collateralised bond first announced in 2021 and repeatedly deferred, remains in development. Bitfinex Securities El Salvador has continued working on the framework, but no issuance has occurred as of Q1 2026. The project's progression depends on continued CNAD regulatory clarity and market conditions for crypto-collateralised debt instruments.

What players should do

Salvadoran players accessing crypto-gambling should treat the legal-tender repeal as administratively irrelevant for their personal activity. The crypto-deposit-to-offshore-operator flow continues without affecting Salvadoran legal-tender status. Players should verify their chosen operator's licensing (most are Curacao or Anjouan-licensed) and dispute-resolution infrastructure as they would in any jurisdiction.

Players considering El Salvador as a potential tax residence for crypto-gambling purposes should consult specialist tax counsel. El Salvador's tax regime includes a 30% income tax for residents on global income, with various exemptions and incentives. The Bitcoin Law had included specific tax exemptions on Bitcoin transactions; the 2025 amendments preserved most of these exemption frameworks. The interaction with gambling-income treatment is complex and jurisdiction-specific.

Players from neighbouring Central American countries (Guatemala, Honduras, Nicaragua, Costa Rica, Panama) accessing crypto-gambling through El Salvador-registered VASPs gain modest credibility benefit from the CNAD oversight. The regulatory framework provides some recourse infrastructure that is absent at fully unregulated counterparties.

For asset choice, dollar-denominated stablecoins (USDT, USDC) remain the dominant crypto-gambling deposit method in El Salvador. The country's dollarisation since 2001 means players already think in USD terms; stablecoin deposits avoid currency-conversion considerations entirely. Bitcoin deposits remain available and supported by the Chivo Wallet infrastructure but represent secondary deposit volume to stablecoin flows.

Salvadoran players should also note that US tax compliance applies if they hold US tax residency through dual citizenship, green card status or substantial presence. The Salvadoran tax framework's treatment of Bitcoin disposals does not override US tax obligations for US-tax-subject individuals. Cross-border tax complexity is meaningful for the substantial Salvadoran-American diaspora.

Conclusion

El Salvador's Bitcoin Law repeal was less consequential than its 2021 enactment had been. The legal-tender provision had become more symbolic than operational by 2024; the IMF-mandated reform removed the symbolism while preserving the underlying regulatory architecture. For the country's crypto-gambling participants — and for the global crypto-financial-services firms that registered under CNAD — the operational environment continues largely unchanged. The structural lesson is that comprehensive crypto frameworks can survive IMF programmes if designed to be IMF-coexistent; the political-marketing lesson is that legal-tender designation is harder to sustain than VASP-registration frameworks. Bukele's "1 BTC per day" continues; the headlines have just become less spectacular.