El Salvador plans to privatize or shut down its government-created cryptocurrency wallet, “Chivo,” which was launched in 2021 when Bitcoin became legal tender in the country. This decision follows a $1.4 billion loan agreement with the International Monetary Fund (IMF), which made acceptance of Bitcoin voluntary for businesses. While Bitcoin will still be recognized as legal currency, many Salvadorans are not using it, with a survey showing about 88% of citizens opted not to engage with Bitcoin in 2023. Despite this, the government intends to continue buying Bitcoin to enhance its reserve, with the National Bitcoin Office reporting that El Salvador holds nearly 6,000 Bitcoins valued at around $582 million.
El Salvador’s Bitcoin Wallet “Chivo” to be Privatized or Closed
El Salvador announced that it plans to privatize or close its government-created cryptocurrency wallet known as “Chivo.” This decision follows a significant $1.4 billion loan agreement with the International Monetary Fund (IMF), addressing the country’s controversial adoption of bitcoin as legal tender back in 2021.
Stacy Herbert, director of the National Bitcoin Office, shared that while bitcoin will remain legal tender, the Chivo wallet is set to be sold or wound down. The Chivo wallet was introduced in September 2021, providing Salvadorans with a way to make payments in bitcoin. However, the usage of this digital wallet has not met expectations, and the government did not disclose how many people actively use it.
Despite these changes, Herbert confirmed that El Salvador is committed to continuing its bitcoin purchases, potentially increasing the pace for its Strategic Bitcoin Reserve. The recent loan from the IMF stipulates that acceptance of bitcoin in the private sector will be voluntary, aiming to mitigate risks associated with cryptocurrencies.
El Salvador made history in 2021 by becoming the first nation to recognize bitcoin as legal tender, attempting to boost its dollar-dependent economy. However, a recent survey indicated that around 88 percent of Salvadorans chose not to use bitcoin in 2023, highlighting the challenges the government faces in gaining public acceptance. Currently, the country holds approximately 5,969 bitcoins, valued at around $582 million.
As the landscape of cryptocurrency in El Salvador continues to evolve, the government’s strategic decisions will play a crucial role in shaping the future of bitcoin usage among its citizens.
Tags: El Salvador, bitcoin, cryptocurrency, Chivo wallet, IMF, Nayib Bukele.
What is happening with El Salvador’s crypto wallet?
El Salvador is considering either selling or shutting down its state-run crypto wallet. This wallet was created to make it easier for people to use Bitcoin after the country made it legal tender.
Why is El Salvador making this move?
The government is looking to address some challenges related to the wallet’s usage. Many people have not used it as expected, and the country wants to focus on better options that could support its economy.
What was the purpose of the crypto wallet?
The crypto wallet was designed to help Salvadorans use Bitcoin for daily transactions. It aimed to promote financial inclusion and to provide services to those without access to traditional banks.
How will this affect Bitcoin use in El Salvador?
If the wallet is sold or shut down, it might slow down Bitcoin adoption in the country. However, the government may explore new ways to promote digital currency use and improve the overall framework.
What are the next steps for El Salvador regarding this decision?
The government plans to evaluate its options carefully. They will seek public input and consider how this decision will impact the economy before making any final choices about the crypto wallet.
