Decline in Cryptocurrency Use for Remittances in El Salvador
Recent figures from El Salvador’s Central Bank reveal a significant decline in the use of cryptocurrency for remittances, with a staggering 45% drop observed in the first quarter of 2025 compared to the same time frame in 2024. The total amount received through crypto during these four months plummeted to $16 million, a steep decrease from $28.83 million reported the previous year.
Challenges Facing Cryptocurrency Integration
Despite having some potential advantages, cryptocurrency has struggled to integrate into the remittance system in El Salvador, with its share of the total inflow falling to a mere 0.52% of the over $3 billion sent by family and friends abroad. The overwhelming preference for traditional financial channels—despite their associated fees—continues to dominate the market among Salvadorans.
Factors Influencing the Downward Trend
The decline in crypto remittances has not gone unnoticed. Analysts suggest several factors may be influencing this downward trend:
- The recent withdrawal of bitcoin as legal tender in the country.
- Restrictions that have limited its usage in public transactions.
- A growing sentiment among citizens that crypto is being sidelined.
These changes likely discourage individuals from utilizing cryptocurrencies in their financial transactions, favoring more conventional methods endorsed by established financial institutions.
Government Support Withdrawal
Adding to the challenges for crypto remittance systems is the planned discontinuation of Chivo Wallet, the government-backed platform intended for these transactions. As the government pulls back support for such initiatives, options for utilizing crypto in remittances diminish.
Presidential Advocacy and Expectations
President Nayib Bukele, a strong advocate for integrating cryptocurrency into remittance practices, previously posited that the technology could recoup the estimated $400 million Salvadorans pay in remittance fees daily. However, the anticipated advantages have not materialized. The percentage of remittances processed through crypto has been on a downward trajectory since peaking at 5% in October 2021.
The sharp decrease in cryptocurrency usage indicates that it has yet to establish itself as a viable alternative for remittance flows in El Salvador.
