First Country to Use Bitcoin

El Salvador made history in 2021 as the first nation to adopt Bitcoin as legal tender. By 2025, the country has shifted toward a more regulated and voluntary framework for cryptocurrency, balancing innovation with international financial obligations and domestic realities.

El Salvador Crypto Regulation 2025: Major Developments Timeline

March 2025: New Regulatory Framework Comes Into Effect

• Marks the official beginning of El Salvador’s regulated crypto era.
• The focus shifts from mandated usage to voluntary adoption and compliance.

February 2025: New Amendments Rolled Out

• Bitcoin use in paying taxes and government fees was banned.
• The state is no longer obligated to support Bitcoin transactions.
• Bitcoin remains voluntary legal tender, i.e., permitted but not mandatory.

January 2025: Bitcoin Legal Tender Status Revoked

• The Legislative Assembly voted to substantially rescind the Bitcoin Law.
• Businesses are no longer legally required to accept Bitcoin.
• Government’s official Bitcoin wallet, Chivo, was phased out.

Key Crypto Regulation Milestones in El Salvador

What the Government and Regulators Are Saying

• National Commission for Digital Assets (CNAD): The main regulatory authority, CNAD oversees licensing, compliance, and enforcement for digital assets, aiming to foster innovation while ensuring financial integrity.
• Central Reserve Bank (BCR): Supervises crypto activities, enforces anti-money laundering (AML) and counter-terrorism financing (CTF) standards, and registers Bitcoin service providers.
• Government Position: President Bukele and regulators emphasize building a transparent, compliant, and internationally connected crypto ecosystem, even as direct state involvement in Bitcoin is reduced.

Crypto Tax 2025

• For Investors/Traders: No capital gains tax on Bitcoin transactions, making El Salvador highly attractive for individual crypto investors.
• For Crypto Companies: Firms benefit from substantial tax exemptions, especially if revenue is generated outside El Salvador. However, compliance with AML, KYC, and reporting standards is mandatory.
• Reporting: Both individuals and companies must maintain records and report to CNAD and the Ministry of Finance as part of annual financial statements1.

Crypto Adoption Rate in El Salvador

• Public adoption remains low, with user penetration at 3.34% in early 2025. The number of active users is expected to reach over 214,000 by year-end, but most Salvadorans do not use Bitcoin for daily transactions.
• The government is working on new initiatives to boost crypto utility and public perception.

Country’s Government Crypto Holdings

• As of 2025, the Salvadoran government holds approximately 6,100 Bitcoins, valued at over $639 million, with continued purchases planned despite the policy rollback.
• These holdings are managed as part of the Strategic Bitcoin Reserve Fund.

Crypto Mining in El Salvador

• El Salvador has promoted Bitcoin mining using geothermal energy from volcanoes, positioning itself as a pioneer in sustainable crypto mining5.
• The state-owned geothermal company LaGeo operates mining facilities powered by 100% clean, emission-free volcanic energy, with a capacity of up to 95 MW5.
• In Q1 2025, Bitfinex Securities announced plans to launch the Blockstream Mining Note 2 (BMN2) in El Salvador, further expanding institutional mining activities in the country7.
• The government continues to support mining as part of its broader digital assets strategy, leveraging renewable resources to attract global investment and innovation.

Conclusion

El Salvador’s approach to cryptocurrency in 2025 is defined by regulatory maturity and strategic adaptation. While Bitcoin is no longer mandatory as legal tender, the government maintains a crypto-friendly, tax-exempt environment and continues to invest in both Bitcoin holdings and sustainable mining initiatives. The regulatory focus has shifted to compliance, transparency, and international cooperation, positioning El Salvador as a unique hub for digital asset innovation in Latin America.

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