Written in August 2026 about events in 2021. This is a retrospective, not contemporaneous reporting.
What happened
El Salvador's Legislative Assembly approved the Bitcoin Law on 9 June 2021 by 62 votes out of 84, three days after President Nayib Bukele announced the plan by video at a conference in Miami. It took effect on 7 September 2021.
The country had used the US dollar as its currency since 2001 and kept it. Bitcoin was added alongside, not instead.
What it changed
"Legal tender" is a term of art, and the law's mechanics are more specific than the phrase suggests.
The text obliged economic agents to accept bitcoin as payment when offered. Prices could be expressed in bitcoin, tax could be paid in it, and exchanges between bitcoin and dollars were exempted from capital gains tax. The state took on the currency risk that acceptance created: it stood up a wallet, Chivo, seeded it with a thirty dollar bonus per citizen who registered, and backed convertibility with a public trust so a merchant who did not want to hold bitcoin could receive dollars instead.
That last piece is the part most coverage skipped, and it is the part that made the scheme function at all. A merchant compelled to accept a volatile asset needs somewhere to put it immediately, and the government made itself that somewhere. Acceptance was mandatory; exposure was not.
What it did not change
It did not make bitcoin a unit of account. Salaries, prices and contracts stayed in dollars, which is what people actually reason in, and a law cannot legislate that.
It did not make anyone use it. Mandatory acceptance is a rule for sellers, not a reason for buyers, and surveys through the following years consistently found most Salvadorans were not transacting in bitcoin. Compelled acceptance and voluntary adoption are different things, and the law could only produce the first.
It also did not put anyone into self-custody. Chivo was a custodial wallet with a government-run backend. A citizen holding bitcoin in it held a balance with the state, which is closer to the arrangement Bitcoin was designed to make unnecessary than to the one it enables.
What we know now
On 30 January 2025 the Assembly amended the law, by 55 votes to two, as part of the conditions attached to a roughly 1.4 billion dollar IMF programme. Acceptance by private businesses became voluntary, bitcoin stopped being accepted for taxes, and its classification as currency was removed, though it remains permitted as a means of payment and keeps its tax exemption.
The experiment is therefore easy to score as a failure, and that reading is too quick. The finding is narrower and more useful: a state can make a currency permissible far more easily than it can make it used. The compulsory half was repealed after three and a half years. What survived was the optional half, which is the half that never needed a law.