El Salvador's Bitcoin Service Providers Face Operational Challenges

According to Cointelegraph, only 20 out of 181 Bitcoin service providers registered with El Salvador's central bank are currently operational, with the majority failing to comply with the country's Bitcoin Law requirements. Local media outlet El Mundo reported data from the Central Reserve Bank of El Salvador, indicating that merely 11% of these providers are functional, while the rest are classified as non-operational. The data reveals that at least 22 non-operational providers have not met the essential requirements of the Bitcoin Law, which mandates rigorous supervision of financial systems. El Salvador's Bitcoin Law stipulates that service providers must maintain an Anti-Money Laundering (AML) program, accurately record their assets, liabilities, and equity, and implement a cybersecurity program tailored to their services. Despite these requirements, 89% of the registered providers have not fulfilled these obligations to be deemed operational. However, a few firms, including the state-backed Chivo Wallet and companies like Crypto Trading & Investment and Fintech Américas, have met the legal criteria. In 2021, El Salvador became the first nation to adopt Bitcoin as legal tender alongside the US dollar, a move central to President Nayib Bukele's economic strategy. Recently, the country signed a $1.4 billion loan agreement with the International Monetary Fund (IMF), which involves scaling back some Bitcoin-related initiatives. As part of the deal, taxes will be paid in US dollars, and public institutions will limit their use of Bitcoin. On March 3, the IMF urged El Salvador to halt public sector Bitcoin purchases, yet President Bukele stated that the government would continue buying Bitcoin, seemingly contradicting the IMF agreement. The IMF deal has sparked speculation about whether El Salvador will revoke Bitcoin's status as legal tender. John Dennehy, a Bitcoin activist and educator based in El Salvador, mentioned in an X Space with Cointelegraph that a rollback law altering Bitcoin's legal status is expected to take effect on April 30.