Chivo Wallet to Be Closed According to IMF Deal
As part of the $1.4 billion loan deal reached with the International Monetary Fund, El Salvador will phase out or sell its state-backed crypto wallet, Chivo; it will not, however, remove Bitcoin as legal tender. The cryptocurrency has remained a cornerstone of the nation’s financial framework under the terms of the IMF deal, in a shift toward altering the country’s Bitcoin strategy.
Stacy Herbert, head of El Salvador’s Bitcoin office, has confirmed the development, adding that it is in line with the requirements set by the IMF. Chivo was launched in August 2021 to increase adoption and make it easier for the citizens to access the cryptocurrency when Bitcoin was legalized.
Chivo Faced Challenges
From a very promising start, Chivo had to overcome one hurdle after another, which eventually led to its collapse. It faced a series of cybersecurity breaches as hackers manipulated weaknesses to reach user data. In April 2024, there was a serious breach that revealed users’ sensitive information and leaked critical software code, thus losing public confidence in the platform.
Additionally, operational challenges and user dissatisfaction plagued Chivo, limiting its adoption. While the government incentivized sign-ups with Bitcoin rewards, these issues proved difficult to overcome.
El Salvador’s Bitcoin Commitment Remains Strong
Even as Chivo phases out, El Salvador remains committed to Bitcoin. Through the leadership of President Nayib Bukele, the nation has emerged at the forefront of cryptocurrency adoption. It is reported that the government of the country has invested $270 million in Bitcoin since 2021, holding more than $632 million of the digital asset and $362 million as unrealized gains.
El Salvador became the first country to adopt Bitcoin as legal tender, setting a precedent for integrating cryptocurrency into a national economy. Despite challenges with Chivo, the country’s broader Bitcoin strategy has yielded significant economic benefits, including bolstered bond markets as Bitcoin surpassed $100,000.
Global Ripple Effects of Bitcoin Adoption
The Salvadoran experiment with Bitcoin has emboldened other nations to consider policies on cryptocurrency. Brazil and the United States are among countries considering Bitcoin reserve laws, in a change of sentiment across the world toward digital currencies.
The IMF agreement and the closure of Chivo mark a turning point, but El Salvador remains a model for Bitcoin integration. The country’s continued advocacy for cryptocurrency underlines its commitment to financial innovation and economic resilience.
