News Report:
Source: Aiying Payment Compliance
Despite the Salvadoran government’s strong promotion of cryptocurrency, especially Bitcoin, under the leadership of President Nayib Bukele, its adoption in the remittance sector has not increased significantly as expected. According to the latest data provided by the Central Reserve Bank of El Salvador, only 1.1% of remittances involved cryptocurrencies from January to August 2024, a proportion much lower than the government’s intention.
Remittance adoption remains low
Although El Salvador has established Bitcoin as legal tender since 2021 and positioned itself as one of the leading countries in the global cryptocurrency industry, its practical application remains limited. Remittances, one of the use cases highly valued by the Bukele government, were supposed to attract people with their low costs and convenient operations. However, despite the government’s strong promotion, many Salvadorans still hold a wait-and-see attitude towards cryptocurrencies such as Bitcoin.
According to the Central Reserve Bank’s report on household remittances, the majority of Salvadorans still choose to use the US dollar when making cross-border remittances. The data shows that only 1.1% of remittances involved cryptocurrencies in the first eight months of 2024, indicating that traditional remittance methods still dominate.
The corresponding amount for this proportion is $57.4 million, which is much lower than the total remittance volume of $5.46 billion. Meanwhile, traditional remittance companies still firmly hold market share, accounting for 58.3% of transactions, while banks handle 37.9% of remittances. The average amount of cryptocurrency remittances is $260.
Continued decline in cryptocurrency remittances
The report also reveals a more evident trend: the use of cryptocurrencies in remittances has been declining since 2022. In 2022, Salvadorans received $84.8 million in remittances through cryptocurrencies. By 2023, this number dropped to $59.5 million, and further reduced to $57.4 million in 2024, indicating a continuous shrinkage in cryptocurrency remittances.
The gap between government promotion and reality
In order to promote the use of cryptocurrencies, the Salvadoran government has spared no effort, even funding the national cryptocurrency wallet Chivo and distributing Bitcoin to the public in the hope of helping them adapt to this new form of currency more quickly. However, despite these efforts, the public’s adoption of cryptocurrencies remains low.
Nevertheless, President Bukele does not overlook this reality. He acknowledges that the application of cryptocurrencies in daily payments and remittances is not as widespread as expected. However, he also emphasizes the benefits that Bitcoin, as a legal tender, brings to the country in other aspects, such as increasing international attention and attracting external investments. The road of cryptocurrency in El Salvador seems to still have a long way to go.
