Few people sent money to El Salvador using Bitcoin and Crypto in the first half of 2023

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El Salvador recorded a notable drop in remittances posted in Bitcoin and other cryptocurrencies in the first half of 2023.

Recent data from Banco Central de Reserva (BCR), the central bank of El Salvador, indicates that the country’s crypto remittance program saw a 26.5% drop in usage, even as remittances grew by more than 5%.

A snippet of data shared by journalist and university professor Edwin Segura on July 22 via Twitter shows that Salvadorans living abroad sent nearly $4 billion back to the country in the first half of 2023.

Crypto remittances decreased by 26.5% in the first half of 2023 compared to a year ago. Traditional remittances increased by 5%. In El Salvador, #Bitcoin is in a coma; The Salvi are salivating for US fiat $$$ https://t.co/OCP2tSmrX5

— Dr. Ricardo J. Valencia at (@ricardovalp) July 22, 2023

In what many may consider an indictment of Salvadoran President Nayib Bukeleslaw who made bitcoin legal tender in the Central American nation, only $46.7 million was paid out via Bitcoin and other cryptocurrencies.

Traditional banking institutions handled around $1.45 billion, while dedicated remittance platforms such as Wise and Remitly handled the bulk of the money, with around $2.4 billion passing through the platforms.

According to the data, remittances to El Salvador increased by 5.2% compared to the same period in 2022. However, the use of BTC to send funds has dropped significantly, with the latest figures being $16.8 million less than in 2022.

In contrast, banks and fiat payment platforms saw increases in their use for remittances. Banks saw a 12.1% increase in the amount of funds sent through them, while remittance companies saw a modest 2.3% increase.

Is El Salvador’s Bitcoin Project Facing Headwinds?

Salvadoran President Nayib Bukele has previously pointed out that his people pay $400 million a year in remittance fees.

By adopting Bitcoin as a means of transferring funds, the government has sought to provide substantial savings to its citizens, in addition to the benefits of a cashless and more secure payment system.

Remittances are a crucial part of El Salvador’s economy, contributing $7.5 billion in 2021. They are expected to reach $7.8 billion this year, or around 27% of the country’s GDP, according to World Bank figures.

The setback in Bitcoin remittances has raised concerns as the country has invested heavily in its Bitcoin project, including around $107 million to buy 2,381 BTC for the national treasury.

Unfortunately, due to market fluctuations, the country suffered paper losses of over $60 million on its investment.

The impact of these struggles is evident as a 2022 survey found that two-thirds of the country consider the Bitcoin program a failure, and three-quarters of the population have never used cryptocurrency.

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