El Salvador: Only 1.1% of $5.46B Remittances Use Cryptocurrency in 2024

Despite El Salvador being the first country to adopt Bitcoin as legal tender in 2021, the use of cryptocurrency for remittances has remained notably low.

According to the Central Reserve Bank, only 1.1% of the $5.46 billion sent to the country between January and August 2024 involved cryptocurrency.

Central Reserve Bank reveals that #crypto makes up only 1.1% of remittances in El Salvador! #cryptocurrency #cryptonews 🇸🇻

— MEME.nto (@MEME_nto_crypto) September 24, 2024

This figure highlights the gap between the government’s ambitious push for crypto adoption and its actual use by Salvadorans.

President Nayib Bukele’s administration has promoted Bitcoin for remittances, arguing it would reduce fees and improve transaction speed.

However, the majority of remittances continue to rely on traditional methods like U.S. dollars, which remain the preferred currency for sending and receiving funds.

Declining Crypto Remittances Reflect Slow Adoption

The 1.1% adoption rate of cryptocurrency for remittances represents $57.4 million, a small fraction of the overall remittance volume.

Despite government efforts, such as funding the national crypto wallet Chivo and offering a Bitcoin airdrop to incentivize usage, Salvadorans seem reluctant to shift away from conventional remittance platforms.

The report shows that 58.3% of remittances are still processed through remittance-focused companies, while traditional banks handle 37.9%.

#Bitcoin exchange depositing addresses are at the lowest level since 2016.

This indicates that very few people are actually willing to send their #BTC to exchanges in order to sell it at this moment. pic.twitter.com/qrdVa7LgNZ

— Leon Waidmann | Onchain Insights🔍 (@LeonWaidmann) September 21, 2024

This trend is not new. Cryptocurrency adoption for remittances has been steadily declining since 2022 when $84.8 million worth of digital currencies were used for these transfers.

The figure dropped to $59.5 million in 2023, and this year’s $57.4 million confirms a continuation of this downward trend.

The average crypto remittance amounts to $260, further underscoring the modest role that digital currencies play in El Salvador’s remittance landscape.

Despite the government’s advocacy for Bitcoin, the data suggests that most Salvadorans still favor traditional methods for transferring funds.

Government Efforts Face Challenges Despite Benefits

While President Bukele’s administration has emphasized the potential advantages of using Bitcoin for remittances—such as reduced fees and faster transactions—the government has acknowledged the slow adoption rate.

However, Bukele pointed to other benefits, such as increased tourism and foreign investment, which he attributes to the country’s pioneering role in adopting Bitcoin as legal tender.

Despite these advantages, the Salvadoran government’s push for greater crypto usage in everyday transactions, including remittances, has faced hurdles.

for the country which include job creation, power generation, revenue generation and economic diversification. The multi-billion-dollar projects were however stalled due to unfavourable market dynamics and slow decision-making by the political class in the past.

— ONLINE BIG BROTHERᰔᩚ🧸 (@OnlineBigBros) September 20, 2024

The national wallet, Chivo, and other crypto initiatives have yet to gain widespread acceptance, reflecting a general hesitance among the population to embrace digital currencies.

Key Insights:

• 1.1% of El Salvador’s $5.46B in remittances involved cryptocurrency in 2024.
• Crypto remittances fell from $84.8M in 2022 to $57.4M in 2024, showing a declining trend.
• Traditional remittance methods still dominate, with 58.3% of transactions handled by remittance companies.

In conclusion, despite government efforts, Bitcoin and other cryptocurrencies remain a small part of El Salvador’s remittance market, with Salvadorans continuing to favor more established methods.