El Salvador’s finance minister, Alejandro Zelaya, said on Aug. 11 that “the Salvadoran population continues to use Bitcoin and the Chivo Wallet,” in the words of a local news outlet.
Which led ElSalvador.com to suggest that his statement “could be far from reality” as a growing number of businesses around San Salvador have been pulling the “Bitcoin accepted” signs from their windows in recent months.
Despite huge paper losses to its bitcoin investment since the start of the crypto market,
Zelaya said the Bitcoin Law “is a bet for the future,” adding “El Salvador’s commitment to the use of Bitcoin and Chivo Wallet is a strong commitment, there are still many steps to be taken.”
However, Zelaya also denied rumors that the Bitcoin ATMs the government installed around the capital city have been removed. Saying they are “totally false,” the Finance Minister added that the empty ATM booths are simply a result of a relocation order by San Salvador’s mayor.
In addition, the same outlet reported that nearly a year after President Nayib Bukele’s law making bitcoin a national legal tender alongside the U.S. dollar, there is little sign of the use of bitcoin on a day-to-day basis.
Citing central bank data, ElSalvador.com said on Aug. 15 that from September through June, just $120.5 million entered the country through the Chivo cryptocurrency wallets, beginning with a high 0f $29.7 million in October but then shrinking to less than $20 million per month ever since.
The peak in that time period was May, with $15.6 million received by digital wallets — a spike the outlet said could have been related to Mother’s Day more than increased interest in sending bitcoin remittances — and added that the central bank noted that it could not say how much of this came through Chivo, as opposed to other digital wallets.
It noted that an April survey by the U.S. National Bureau of Economic Research found that just 20% of the population still uses the Chivo wallet.
“The most important reason for not downloading the app” it found, “is that users prefer to use cash, which was followed by trust issues: Respondents did not trust the system or Bitcoin itself.”
In late July, Simon Weaver, Morgan Stanley’s global head of emerging-market sovereign credit strategy, advised clients to buy El Salvador’s bonds saying that while they are deep in junk territory and risky, at 28 cents on the dollar they had too much risk priced in. There may be something to that, as the price index jumped to 36.8 cents.
Coming Into the Country
Diario El Salvador profiled a success of the Salvadoran bitcoin experiment, looking at a cryptocurrency company that set up shop in the country as a result.
Financial services firm Structure.fi opened an office in the country on Aug. 11, offering exchange services, crypto lending investments and borrowing services, and the ability to make or receive payments, said a company press release.
Embracing decentralized finance (DeFi) firms, Cristian Flores, presidential commissioner for strategic projects, said the Bitcoin Law allows offers Salvadorans access to state-of-the-art crypto services.
“We are very pleased to see how new companies are coming to the country to provide services and tools that allow more investors to have access to new possibilities to venture with their capital in El Salvador,” Flores said in the release.
According to the central reserve bank, more than 50 bitcoin service providers have set up shop in the country.
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