Between January and February, El Salvador only received 1.7% of remittances in Bitcoin through digital wallets. The former president of the Central Reserve Bank commented that Salvadorans abroad still prefer traditional financial institutions.
The family remittances in Bitcoin (BTC) sent to El Salvador reached their lowest level in February. That happened after the rise in October, one month after the law turning the cryptocurrency into legal tender came into force.
In February, the Central American country received USD 572 million in family remittances, of which USD 9.4 million was in Bitcoin (around 220 BTC). That contrasts with the amount sent in January, when El Salvador received USD 10 million in Bitcoin, according to the Central Reserve Bank (BCR).
Between the first two months of 2022, USD 19.4 million in cryptocurrencies went to El Salvador. That is equivalent to 1.7% of the total that Salvadorans received through digital wallets like Chivo Wallet, developed by the government.
However, the drop in remittances also extends to December (USD 12 million) and November (USD 12 million). That contrasts with the USD 29.7 million that Salvadorans abroad sent to their families in October.
Shortly after the Bitcoin Law entered into force in El Salvador in September 2021, El Salvador received USD 2.6 million in BTC.
That is the only data on the remittances in Bitcoin sent to El Salvador to which there is access. The EFE agency reported that the BCR has kept the information on the BTC transferred through the government wallet.
It is relevant to know that most family remittances sent to El Salvador come from the United States. Only in January, 93.8% of the transfers left that North American country, preceding Canada, Spain, Italy, and the United Kingdom.
The Distrust in the Chivo Wallet May have Caused Remittances to Drop
Luis Membreño, former president of the BCR, considers that the drop in the remittances in cryptocurrencies is due to a lack of trust. He commented that Salvadorans abroad continue to prefer traditional financial institutions over cryptocurrency exchanges or wallets.
The Chivo Wallet has failed, some transactions have not appeared, and there have been losses of funds. The former official said that those factors add to the fluctuation of Bitcoin to generate distrust among users.
The main problems with the Chivo Wallet include difficulties in interacting with other cryptocurrency wallets. When conducting a transaction, there is a delay in appearing in the app or even does not happen. There are also failures in the remittances in cryptocurrencies when operating with bank accounts.
The Salvadoran government wants to solve the problems with the Chivo Wallet. However, they said that an American company would provide them with technological support to overcome the flaws with the state Bitcoin wallet.
Regardless of that, the cryptocurrency industry continues growing in El the Central American nation. At least 45 Bitcoin service providers like exchanges, digital wallets, payment processors and Bitcoin custodians have registered in El Salvador.
By Alexander Salazar
