El Salvador is experiencing significant challenges in its cryptocurrency experiment as crypto remittances have decreased by 45%. This raises questions about the country's economic stability.
Current Situation with Crypto Remittances
According to official data, crypto remittances to El Salvador dropped by 44.5% in Q1 2025 compared to the same period in 2024. This marks the first significant decrease since the country adopted Bitcoin as legal tender in 2021. In Q4 2021, remittances peaked at $57 million through the Chivo Wallet. However, this figure has now halved to just $16 million in 2025. In 2024, the total was $28.83 million, averaging around $7 million per quarter from approximately 27,000 transactions. Crypto transfers now account for a mere 0.52% of the country’s $3 billion in total remittance inflows—a marked decline from previous years.
Reasons for the Drop in Crypto Remittances
The decline is largely attributed to Bitcoin’s price volatility. Between January and May 2025, BTC fluctuated between $93,907 and $108,949, creating uncertainty and risk aversion among Salvadorans. Additionally, ongoing regulatory challenges and inconsistent market sentiment have contributed to the drop in crypto adoption for remittance purposes.
Reasons for Supporting Crypto Remittances
El Salvador has long promoted cryptocurrency as a way to boost the economy. The government supported the adoption of Bitcoin and blockchain technology to tap into the $7 billion Central American remittance market. The goal was to reduce dependence on traditional services like Western Union and cut high transaction fees, allowing more money to reach families in need. However, despite these intentions, the current decline indicates a failure to achieve meaningful adoption at scale.
The falling crypto remittance numbers could have serious economic repercussions for El Salvador, affecting GDP growth, foreign exchange reserves, and balance of payments. Nevertheless, there is some optimism as overall digital remittances are projected to reach $148.39 million in 2025, indicating potential growth in non-crypto digital transfers.
