Out of the 181 Bitcoin service providers registered with the Central Bank of El Salvador, only 20 are currently operational, while the rest have not fulfilled the necessary requirements set forth by the country’s Bitcoin Law.
A report from local media outlet El Mundo referenced data from the Central Reserve Bank of El Salvador, revealing that only 11% of these service providers are functioning. The remaining providers are categorized as non-operational in the central bank’s records.
The findings indicated that at least 22 of the non-operational providers have failed to comply with several stipulations under the Bitcoin Law, which obligates providers to implement robust supervision of their financial systems.
Majority of El Salvador’s Bitcoin service providers are inactive
According to El Salvador’s Bitcoin Law, providers are required to have an Anti-Money Laundering (AML) program, maintain records that accurately reflect the company’s assets, liabilities, and equity, and develop a customized cybersecurity program aligned with their services.
The data indicates that 89% of the registered providers have not fulfilled some of these requirements and, as a result, cannot be classified as operational.
However, there are a few firms that have met the legal criteria to operate, including the state-supported Chivo Wallet and firms like Crypto Trading & Investment and Fintech Américas.
Related: Cathie Wood to launch El Salvador’s AI public education initiative
El Salvador’s Bitcoin initiative
In 2021, El Salvador made history by becoming the first nation to recognize Bitcoin as legal tender alongside the US dollar. This decision has become a central component of President Nayib Bukele’s economic strategy.
Recently, however, the Central American nation struck a deal with the International Monetary Fund (IMF) for a $1.4 billion loan, which includes concessions to scale back some of its Bitcoin initiatives. As a part of this agreement, taxes will be paid in US dollars, and public entities will curtail their Bitcoin transactions.
On March 3, the IMF urged the country to halt its public sector Bitcoin purchases. Despite this, Bukele stated that the government plans to continue buying Bitcoin, which appears to contradict the IMF agreement.
This deal has led to speculation regarding whether the country might revoke Bitcoin’s designation as legal tender. John Dennehy, a Bitcoin activist and educator based in El Salvador, mentioned in an X Space with Cointelegraph that a law to reverse Bitcoin’s legal status is expected to take effect on April 30.
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