El Salvador’s Bukele says ‘Bitcoin hasn't had the widespread adoption we hoped for'

Nayib Bukele, the president of El Salvador who passed the bill to legalize bitcoin as legal tender in the Latin American nation, said the monetary experiment has had mixed results so far.

“Bitcoin BTC +2.78% hasn't had the widespread adoption we hoped for. Many Salvadorans use it. The majority of large businesses in the country have it,” Bukele said in a wide-ranging interview with TIME Magazine when asked if bitcoin monetization has “been a success.”

“The positive aspect is that it is voluntary; we have never forced anyone to adopt it. We offered it as an option, and those who chose to use it have benefited from the rise in Bitcoin,” he added. “I expected more adoption, definitely, but we always prided ourselves on being a free country, free in every way.”

The so-called Bitcoin Law, passed on Sept. 7, 2021, during the height of the last bull market, made El Salvador the first country to adopt bitcoin as an alternative legal currency in an attempt to digitize the economy and reduce its reliance on the U.S. dollar, which is the most widely circulating currency in the country.

At launch, the government spent $75 million to distribute approximately $30 in bitcoin to people who registered for the state-backed Chivo wallet. Additionally, the country has added bitcoin as a long-term treasury asset and plans to build a nationalized bitcoin mine powered by a volcano.

Bukele noted that “those who saved in Bitcoin” have likely seen decent returns now that the price of bitcoin is back near all-time highs. “Thank God for that. It's good that people have those earnings. Those who decided not to use it did not have those gains,” he said.

“I'm not going to say it's the currency of the future, but there's a lot of future in that currency,” Bukele said. He pointed to the growing footprint of Wall Street firms in the crypto industry as well as bitcoin becoming a campaign issue in U.S. elections.

Lauded by some as a “philosopher king” and detracted by others as an “authoritarian,” Bukele’s plan has drawn skepticism from national and international critics. Moody's, for instance, downgraded the country’s credit rating, citing Bukele's fiscal policies. However, Bukele noted the International Monetary Fund softened its critical stance on the policy and noted its expected risks " have not materialized ."

Bukele noted that despite the limited success in domestic adoption, bitcoin improved El Salvador’s “branding,” brought in foreign investments and led to a spike in tourism. Several bitcoin firms have offices or headquarters in the country.

“In the end, the fact of being a ‘First Mover,’ I think, gives us a small advantage, as far as it goes. I feel that it could have been much better. I wouldn't consider it a resounding success,” Bukele said. “Still, I do believe that the positive outcomes outweigh the negative, and the issues that have been highlighted are relatively minor."