El Salvador’s Bitcoin Adoption Yet to Make ‘Significant Impact,’ GAFILAT Reports

El Salvador’s compliance with international anti-money laundering laws was evaluated in a study that was just published by the Financial Task Force of Latin America (GAFILAT). The study found that despite bitcoin becoming legal tender in 2021, the nation’s financial system has not been significantly impacted by cryptocurrencies.

El Salvador’s use of bitcoin has not taken off as much as was first thought, according to GAFILAT. The results demonstrate that, during the course of the evaluation period, only $6.6 million—or less than 0.1% of all assets held by Salvadoran banks—entered the financial system through bitcoin-related activities. This suggests that the country’s economy has not yet had a major impact from bitcoin.

Remittance Use Case Falls Short

The report also evaluated the use of bitcoin for remittances, a key focus for El Salvador’s adoption of the cryptocurrency. GAFILAT found that less than 1% of remittances were processed through digital wallets. Instead, most Salvadorans continue to use traditional financial institutions like banks to send and receive funds. The report highlighted a strong preference for the U.S. dollar, which has been the country’s primary currency since 2000.

The use of bitcoin has not increased dramatically despite efforts to promote it, such as the release of the Chivo wallet and the offering of $30 in BTC to users.

El Salvador’s leading bitcoin advocate, President Nayib Bukele, has admitted that the cryptocurrency’s rise has not been as anticipated. Bukele stressed, nonetheless, that bitcoin contributed to the nation’s rebranding by drawing in foreign investment and travelers. He still sees the virtual money as an important instrument for El Salvador’s long-term economic development.