Bitcoin Isn’t Replacing The Dollar in El Salvador After All

By Scott Chipolina

The U.S. Dollar will remain legal tender in El Salvador, the country’s Trade and Investment Minister, Miguel Kattan, said yesterday, per local news outlet El Mundo.

Kattan also added that Bitcoin activity in the country would be linked to the dollar exchange rate.

The announcement came in the immediate aftermath of El Salvador’s President, Nayib Bukele, announcing that Bitcoin would be formally adopted as legal tender in the country. Bukele made his announcement at this year’s Bitcoin Conference in Miami.

Bukele said that he would send a bill to Congress in the coming days that would kick start the process of recognizing Bitcoin as legal tender, claiming it would help Salvadorans abroad send remittances home.

Controversy in El Salvador

Bitcoin advocates celebrated the move by El Salvador, judging it to be a marquee moment in Bitcoin’s quest for adoption.

Jack Mallers, a well-known Bitcoin advocate and founder of the payments app Strike, tweeted ahead of Bukele’s announcement at the Bitcoin Conference in Miami.

“Today, the world changes for the better. Today, humanity takes a leap forward in instilling human freedom, financial inclusivity, and so much more,” he said at the time.

El Salvador isn’t, however, a shining example of a country that instills human freedom and financial inclusivity.

The Economist’s Democracy Index 2020 report found that El Salvador was not a democracy but a “hybrid regime”—a category one step above outright authoritarian states but below even flawed democracies, let alone full democracies.

This groups the South American country alongside countries like Ukraine, Sierra Leone, and Bangladesh.