El Salvador's Chivo Wallet Faces Closure as Government Shifts Bitcoin Strategy

Summary:

El Salvador plans to privatize or close the Chivo crypto wallet.
This decision follows a $1.4 billion loan agreement with the IMF.
Chivo was created in 2021 to facilitate bitcoin payments for Salvadorans.
The IMF states that acceptance of bitcoin will be voluntary in the private sector.
88% of Salvadorans reportedly do not use bitcoin.

Major Changes for Chivo Wallet

El Salvador is set to privatize or shut down its government-created cryptocurrency wallet, Chivo, which was established by President Nayib Bukele when he made bitcoin legal tender in 2021. This announcement follows a $1.4 billion loan agreement with the International Monetary Fund (IMF) that scrutinized the country's controversial adoption of bitcoin.

What’s Next for Chivo?

Stacy Herbert, director of Bukele's National Bitcoin Office, stated on social media platform X that while Chivo will be sold or wound down, the government will continue to purchase bitcoin for its Strategic Bitcoin Reserve, possibly at an accelerated pace. However, she did not disclose the number of users of the Chivo wallet, which was launched in September 2021 to facilitate bitcoin payments for Salvadorans.

IMF's Stance on Bitcoin

The IMF emphasized that under the new loan agreement, the acceptance of bitcoin by the private sector would be voluntary, and that risks associated with bitcoin are being actively mitigated. Furthermore, it noted that the public sector's engagement in bitcoin-related economic activities would be constrained.

Bitcoin's Journey in El Salvador

In a bold move back in 2021, El Salvador became the first country to recognize bitcoin as legal tender, aiming to rejuvenate its dollar-dependent economy. However, in a recent address, Bukele acknowledged that the introduction of bitcoin was the most unpopular decision made by his administration. A survey indicated that about 88% of Salvadorans did not use bitcoin in 2023.