In 2021, El Salvador announced his Bitcoin Act, and along with it published documents to the world that could be interpreted as the basis for the government’s new rules of money. However, these rules, which have now been modified and enacted today without eliminating digital currency as money for statutory bids, leave it as an optional asset.
As reported by Cryptooticias, Salvadoran’s legislative assembly approved the reform sheet published in the official official gazette on January 29, 2025. Lawmakers revised six of them (1, 3, 5, 7, 11, 12). Three more (4, 8, 9) have been removed. This is all part of a US$1.4 billion loan agreement between the IMF and the Central American country.
According to the document, the entry into force of these adjustments to the regulations will be 90 days after its publication in the official official gazette, so this period is met today, May 1st. Let’s explore the key to this conversion.
The reforms in Article 1 establish that Bitcoin enjoys fiat currency with unlimited freedom, but acceptance is voluntary and limited to natural or legal entities with private participation. This means that only private actors can decide to accept Bitcoin in transactions. Except for this required state. In fact, as part of this agreement with the IMF, El Salvador has decided to suspend the Wallet Goat, a Bitcoin wallet created by the government.
The reforms in Section 1 of El Salvador’s Bitcoin Act introduce a major change in the way this digital currency is regulated as a means of payment, balancing legal status and freedom of choice.
This text establishes that Bitcoin remains in its position as a fiat currency with unlimited freedom. In other words, if the parties agree, they can resolve their obligations without legal restrictions or carry out economic transactions without legal restrictions. This attribute ensures that Pioneer’s digital currency has legal support comparable to the digital currency of other legal bid currencies, such as the US dollar, which is also circulated domestically.
Article 3: All prices can be expressed in Bitcoin
Before the reforms, the original Article 3 allowed the price of El Salvadoran goods, services or obligations to be expressed directly in Bitcoin. This meant that a company, business or individual had the option of setting and displaying prices for products or services in Satoshis, in addition to the US dollar (other fiat currency in the country). The disposition sought to reflect the ambitions of the legislation to promote the adoption of Bitcoin as a functional currency for daily trading, consolidating it into the economy at the same level as the dollar, and normalizing its use in daily trade.
Now, the reform to Article 3, which came into effect today, has changed the text as follows:
“Type of type Changing the between Bitcoin and US Dollar It is freely established by the market. All prices can be converted to Bitcoin depending on the exchange rate mentioned above».
This reform changes the approach to expressing prices directly in Bitcoin, ensuring that prices become Bitcoin according to freely determined market exchange rates without state intervention. Unlike the original text that allowed Bitcoin prices (such as 0.0005 BTC for the product), new language Recognizing the dominance of the dollar in the Salvador economykeeps the price in dollars and promotes conversion to Bitcoin when trading.
Article 5: Bitcoin capital gains tax exemption
The first section 5 of the Bitcoin Act, which is in effect since 2021, exempts Bitcoin exchanges from two major taxes. Income tax, a capital gain tax that applies to income taxes on individual and business incomes and profits obtained by increasing the value of a digital currency when using or selling it.
The provisions financially equated Bitcoin with the US dollar, eliminated tax burdens, promoted adoption as a payment instrument, and promoted integration into the Salvador economy without blocking users due to financial costs.
Currently, reforms have established that “the exchange of Bitcoin is not subject to tax profit tax.” This new version Eliminate exemptions from income taxexists in the original text. This means that certain benefits obtained from Bitcoin may be subject to this tax, depending on the fiscal regulations and their interpretation. Furthermore, the comparison was suppressed by “other fiat currencies” and simplified the text, but cut Bitcoin from financial treatment comparable to the dollar.
This most accurate approach focuses solely on financial gains and clarifys the incentives for users trading with Bitcoin, but limits the exemption exemption compared to previous versions. And although this measure continues to promote the adoption of money created by Nakamoto at, reducing the cost of exchange, The possibility of income tax application will be introduced by UNCE.And it depends on future regulations issued by tax authorities.
Bitcoin Limited Private Sector Approval
Before reform, Article 7 of the Bitcoin Act in El Salvador established:
“All economic agents must accept Bitcoin as a form of payment when provided by those who have acquired the goods or services.”
This original article It will be forced to Therefore, all economic agents, namely, nature or corporations, including corporations, businesses, independent professionals, and theoretically public institutions, were accepted as a form of payment if a client or user provided it to acquire a good or service.
Now, the reform to Article 7, which came into effect today points out:
“Only a corporation with natural or private participation can accept Bitcoin as a form of payment provided by a person who has acquired the goods or services, or provided for payment of a financial obligation.”
The original Article 7 created controversy and practical challenges after it came into effect in 2021 to the Bitcoin Act. Many businesses, especially small and medium-sized businesses, have faced difficulties in implementing BTC payment systems due to lack of technology infrastructure, training in digital currency, or trust. Furthermore, the obligation has been criticized by citizens and international organizations, particularly the IMF, pointing to financial and operational risks, particularly for the public sector.
Changes to Article 7 of the Bitcoin Act
- Eliminations required: The original text requires that all economic agents accept Bitcoin, reforms are voluntarily accepted and are limited to private or legal. Now, private ones can decide whether Bitcoin accepts it without any legal obligations.
- Focus on freedom of choice: This reform protects the autonomy of private actors by not imposing Bitcoin use and addresses the practical and resistance difficulties arising from the initial obligation.
- Enlarge transaction scope: The new language adds that Bitcoin can be used not only for goods and services but also for “financial obligations.”
- Focus on freedom of choice: This reform protects the autonomy of private actors by not imposing Bitcoin use and addresses the practical and resistance difficulties arising from the initial obligation.
Central Bank as El Salvador’s largest Bitcoin regulator
Responsibility for issuing regulations governing the use of Article 11 and the Financial System (SSF) Supervision (SSF) Bitcoin assigned to the Central Reserve Bank (BCR). These standards required the establishment of the rules and procedures necessary to adopt Bitcoin as fiat currency, including aspects such as its use in transactions, oversight of financial institutions, consumer protection, and prevention of illegal activities.
Currently, the reforms in Article 11 state that “according to legal authority, the Central Reserve Bank and the financial system supervision will issue corresponding regulations.” This change Eliminate the original 90-day deadline forced to issue regulations to BCR and SSF After the law came into effect in 2021, it gave them more flexibility to develop regulations without deadlines.
However, the reform does not mention the Digital Assets Commission (CNAD), created in El Salvador through the Digital Assets Act, approved in 2022, or its functions. This entity plays as the leading regulator of domestic digital assets.. The Act has established CNAD as the person responsible for applying securities regulations to digital assets, as the institution itself demonstrates, with the aim of protecting buyers’ rights and issuing and issuing fraudsters to operate in the country.
This omission in this reform suggests that in the context of Bitcoin law, the responsibility of regulations relating to digital currency is only applicable to BCR and SSF without integrating CNADs.
Meanwhile, the exclusion of CNAD in reform raises questions about how the regulatory frameworks for Bitcoin and other digital assets will harmonize in El Salvador.
The reforms in Article 11 assign BCRs and SSFs the issuance of regulations relating to the use of Bitcoin, but no collaboration with CNAD is mentioned. This could limit our ability to comprehensively address the challenges of digital assets regulating.
Obligation of status to pay according to agreed people
Before the reforms were approved, Article 12, Article 12 of the Bitcoin Act in El Salvador established:
“All money obligations expressed in the United States that exist before the validity of this Act may be paid in Bitcoin.”
Currently, due to reforms, the article has been changed to:
“The financial obligations of both domestic and external states must be paid in the coins contracted.”
In such a way, the reforms of Article 12 of the Bitcoin Act are in effect today and will lead to significant changes by limiting the scope solely to the financial obligations of both domestic and external states and eliminating the option to pay with BTC. Unlike the original text, the dollar (public or private) allowed it to pay off in Pioneer’s digital currency, The new language forces you to pay in the initially agreed currency (such as the dollar or euro), excluding Bitcoin.
In short, reforms to the Bitcoin Act do not represent a complete 180-degree turn. Because e-cash between pairs retains the legal currency situation and its use is facilitated by incentives and regulations in the private sector. However, they mark a significant distance from the state of the Bitcoin project, exclude Bitcoin from the finances, and eliminate the obligation to embrace and adopt a more careful and regulated approach.
This adjustment reflects practical responses to actual limitations, IMF pressure, and the need for stability in dollarized systems, but could undermine the original ambitions of El Salvador is positioned as “Bitcoin Nation”Although this story is still in the mouths of Max Keyer and Stacy Herbert, advisers of BTC’s Nayib Bukele.
However, the future of the project will rely on how the private sector responds to these incentives and the government’s ability to coordinate comprehensive regulatory frameworks, including CNAD, to promote confidence in pioneering digital assets.
But beyond reforms in Bitcoin law, which reflect a more cautious approach to the state towards digital currency, there are independent initiatives that play an important role in fostering adoption in El Salvador.
Projects such as My First Bitcoin, an educational institution that offers free courses to teach Salvadorans how to use and understand Bitcoin, empowering thousands of people, from students to small merchants, and promoting financial inclusion in communities where access to banking services is limited.
Also, Bitcoin City, a local community that integrates cryptoactive into the daily economy, like Zonte (known as Bitcoin Beach), is Creating an ecosystem where Bitcoin is used for daily transactionsFrom food purchases to payment services.
These initiatives, promoted by civil society and the private sector, compensate for the state’s impulse reductions and demonstrate that the Bitconner project in El Salvador is still alive and growing from bases and consolidating the country as a reference in the adoption of digital currency.
