El Salvador Backs Away From Its Bitcoin Experiment

Bitcoin is out of power in El Salvador after lawmakers in the country rushed to change laws around the cryptocurrency following a deal with the International Monetary Fund.

San Salvador and President Nayib Bukele wanted a loan from the IMF for $1.4 billion dollars and the IMF agreed so long as the country agreed to scale back its pro-Bitcoin laws. El Salvador’s congress, which is dominated by Bitcoin-loving Bukele allies, agreed. The legislation passed on a vote of 55-2, modified 6 articles of the Bitcoin law, and repealed 3 others.

Bitcoin is still considered legal tender in El Salvador but is no longer “currency,” meaning its adoption is optional. Businesses can now choose whether or not they’ll accept Bitcoin instead of being forced to by government mandate. The state will also no longer accept Bitcoin as a form of payment for taxes and debts and it’s scaling back investment in the “Chivo Wallet,” the state-backed crypto-wallet.

Bukele and El Salvador went all-in on Bitcoin in 2021. After his election, the young leader pushed through laws to make Bitcoin legal tender and hyped up huge projects he said would change his country’s economy. He planned a massive Bitcoin city and announced it on stage amid laser-eyed memes, aliens, and a light show. The plan was to build the city around a volcano in the shape of a physical Bitcoin and capture geothermal energy from the Volcano to mine cryptocurrency.

In Bukele’s vision, the number would go up. Forever.

It didn’t come to pass. The economy of El Salvador has gotten so rough, in fact, that it needed to reach out to the IMF for a loan to stabilize itself. The ousting of Bitcoin from El Salvador has been on the IMF’s radar for a long time. “There are large risks associated with using Bitcoin as legal tender, especially given the high volatility of its price. We don’t recommend it. In the short-term, the costs and risks largely outweigh the benefits,” it said in a 2022 statement criticizing the country’s economy.

Meanwhile, Bukele’s lackeys swear that El Salvador is still a Bitcoin-friendly country. But not that friendly. The push to adopt cryptocurrency has been a flop among normal people. Less than 12% of the country has used Bitcoin and Bukele admitted that it “has not had the widespread adoption we hoped” in an interview with TIME.

But Bukele told the magazine that the Bitcoin push built the country’s brand and made people think of things other than violence and prison when they thought of El Salvador. But violence and prison are back in the news following Bukele’s meeting with U.S. Secretary of State Marco Rubio.

El Salvador is famous for its massive supermax prisons. The horrifying monstrosities house tens of thousands of prisoners. Bukele and Rubio met over the weekend and the El Salvadorian president offered up prison space to America. The U.S. could, he said, put anyone they want inside his concrete nightmares, including American citizens.

Ruibo and the Trump administration are shopping around for places to house people the country is deporting as part of its immigration crackdown. Rubio and the White House said there are no plans to deport and house American citizens in foreign prisons.

But the offer is on the table. In El Salvador, Bitcoin is out of fashion and prisons are very much in.