El Salvador, that has been criticised by the IMF for legalising Bitcoin as a payment option, is reportedly witnessing a drop in the usage of the cryptocurrency. The economy of the central American nation, that depends largely on remittance incomes, has recorded a significant fall in BTC-based remittances. Data from the Salvadoran Central Reserve Bank (BCR) has revealed that BTC-based remittances have slipped by 17.8 percent around January and February this year.
A remittance is a non-commercial money transfer initiated by a foreign worker, a member of a diaspora community, or a person with ties abroad to support the household income of their families in their native countries.
In the first two month of 2022, El Salvador had bagged $19.45 million (roughly Rs. 160 crore) in remittances received as Bitcoin tokens. Whereas this year, during the same months, the amount stood at $15.98 million (roughly Rs. 130 crore) registering a drop of $3.47 million (roughly Rs. 28 crore) from last year.
In 2021, El Salvador had become the first nation in the world to declare Bitcoin as a legal tender alongside the US dollar. The country launched its own, digital wallet called Chivo, via which citizens could store and spend their BTC holdings.
Getting remittances in full amounts from their diaspora working abroad was one amongst the many reasons why El Salvador confidently introduced BTC as its legal tender. Previously, money transfer services like Western Union, were blamed for slashing a large part of the remittances as service fee. With BTC transfers however, the country wished to get the complete amounts with little to no service fee as well as instant cross-border transfer of funds.
Now that the BTC-based remittance has dropped in El Salvador, it infers that the overall usage of BTC has also seen a drop in the nation.
“A survey by the University Institute of Public Opinion of the Central American University (Iudop) released in mid-January points to the ‘almost zero use’ of Bitcoin in El Salvador in 2022 and the persistence of ‘unfavourable opinions’ among the population about the cryptoactive,” claimed a report by the EFE Agency.
As of now, Salvadoran president Nayib Bukele has not addressed the situation.
Earlier this year, when BTC was trading lowly on the crypto charts, El Salvador had declared that it will purchase one BTC per day to show its support towards the digital asset.
The country is also trying to trigger more crypto-related activities amongst its nationals.
Recently, El Salvador began granting operational approvals to crypto firms wishing to set up shop within its territories. Crypto exchange Bitfinex has become the first crypto firm to have secured an official licence from El Salvador to operate as a digital asset service provider in the nation.