😱El Salvador passes congressional reform bill: Bitcoin no longer has legal tender status!

Do you remember when El Salvador made Bitcoin legal tender? When it was implemented in September 2021, the Salvadoran government was particularly proactive, not only requiring businesses and public institutions to accept Bitcoin payments (unless they lacked the technical conditions), but also giving users who installed the official Chivo wallet a bonus of $30 each to encourage usage. To promote Bitcoin, the government spent over $200 million establishing an operational framework, creating digital wallets, installing Bitcoin ATMs... one could say they invested heavily.

However, ideals are often grand, while reality can be stark. According to a survey by El Salvador's most renowned polling company, Ludop, one year later, only 21% of people had used Bitcoin services, and by 2024, this number had dropped to 8.1%. Most Salvadorans actually do not support it, with 71% of the population opposing the policy from the start.

This situation drew the attention of the International Monetary Fund (IMF). The IMF demanded that El Salvador "reduce Bitcoin risks" and made it a condition for approving a $1.4 billion loan. To obtain the funds, El Salvador amended its laws on the last day of January, revoking Bitcoin's legal tender status. Now, Bitcoin is no longer considered legal "currency," businesses accepting Bitcoin has become voluntary, and it cannot be used for tax payments.

The ruling party is also quite helpless; after all, promoting Bitcoin was an important policy for them, and now they have to give it up. President Nayib Bukele has been very active on social media, but this time he has remained silent about the cancellation of Bitcoin's legal tender status, likely feeling quite uncomfortable about it.

This matter is indeed thought-provoking. Bitcoin, as a virtual currency, is very trendy but carries significant risks, with severe price volatility and high regulatory difficulties. El Salvador's experience reminds us that financial innovation is important, but it must be aligned with actual conditions and not blindly follow trends. Therefore, when the government implements new policies, it must fully consider the public's acceptance and the feasibility of practical operations; otherwise, it may ultimately be a futile effort.

Is the cancellation of Bitcoin's legal tender status a wise move or a regrettable action? How should we balance financial innovation and risk control?