Only 20 of the 181 Bitcoin service providers registered with El Salvador’s central bank are operational, with the rest failing to meet the country’s requirements under its Bitcoin Law.Â
Local media outlet El Mundo cited data from the Central Reserve Bank of El Salvador, showing that 11% of the service providers are operational. According to the central bank’s database, the rest of the providers are classified as non-operational.Â
The data showed that at least 22 non-operational providers have failed to meet most of the country’s Bitcoin Law requirements, which mandate that providers implement stringent supervision of their financial systems.Â
Most of El Salvador’s Bitcoin service providers are non-operational
El Salvador’s Bitcoin Law requires providers to maintain an Anti-Money Laundering (AML) program, keep records that accurately reflect the company’s assets, liabilities and equity and have a tailored cybersecurity program depending on the nature of its services.Â
The data showed that 89% of the registered providers have failed to meet some of these obligations to be classified as operational.Â
Still, a few firms have satisfied the legal criteria, including the state-backed Chivo Wallet and companies including Crypto Trading & Investment and Fintech Américas.
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El Salvador’s Bitcoin experiment
In 2021, El Salvador became the first country to accept Bitcoin as legal tender along with the US dollar. This move made Bitcoin integral to El Salvador President Nayib Bukele’s economic strategy.Â
However, the Central American country recently signed a deal with the International Monetary Fund (IMF) on a $1.4 billion loan in exchange for rolling back some of its Bitcoin-related efforts. Under the agreement, taxes will be paid in US dollars and public institutions will limit their use of Bitcoin.
On March 3, the IMF asked the country to stop its public sector Bitcoin buys. Still, Bukele said the government will continue to purchase Bitcoin, seemingly contradicting its IMF deal.
The IMF deal prompted speculation about whether the country would rescind Bitcoin’s status as legal tender. John Dennehy, an El Salvador-based Bitcoin activist and educator, said in an X Space with Cointelegraph that a rollback law changing Bitcoin’s legal status is set to take effect on April 30.
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