El Salvador Reassesses Bitcoin Strategy: Closure of Chivo Wallet Under Consideration

El Salvador plans to close or privatize the Chivo cryptocurrency wallet amid a new $1.4 billion IMF loan agreement. Despite this, the government will continue to purchase bitcoin for its reserves, though a significant portion of the population has not adopted it. Approximately 88 percent of Salvadorans reportedly do not use bitcoin as of 2023.

El Salvador has announced the potential closure or privatization of the cryptocurrency wallet known as “Chivo,” which was initiated by President Nayib Bukele following the country’s 2021 decision to recognize bitcoin as legal tender. This development arises in the context of a recent $1.4 billion loan agreement with the International Monetary Fund (IMF), which emphasized a cautious approach to bitcoin while allowing its continued purchase for the government’s Strategic Bitcoin Reserve.

Stacy Herbert, the director of the National Bitcoin Office, confirmed via social media that the Chivo wallet, created to facilitate bitcoin transactions for Salvadorans, may no longer serve its original purpose. While the exact number of active users has not been disclosed, a survey indicated that approximately 88 percent of the population had not engaged with bitcoin in 2023. Herbert reiterated the government’s commitment to maintaining bitcoin within its financial strategies despite the privatization of Chivo.

In September 2021, El Salvador became the first nation globally to recognize bitcoin as legal tender, an unprecedented move intended to invigorate its economy primarily reliant on remittances. The introduction of bitcoin was met with mixed reactions, and in recent assessments, it has been reported that a significant majority of the populace does not utilize bitcoin in their daily transactions. Furthermore, the IMF has underscored the necessity to manage risks associated with bitcoin while ensuring voluntary adoption by the private sector.

In summary, El Salvador’s decision to potentially phase out the Chivo wallet illustrates a shift in strategy following the IMF’s loan agreement. While bitcoin remains legal tender, the government must reconsider its approach, given the substantial disinterest among citizens. The ongoing accumulation of bitcoin for its Strategic Reserve indicates that the nation’s engagement with cryptocurrency will persist, albeit in a more controlled manner.

Original Source: ticotimes.net