Autor Cointelegraph by Christina Comben

After what feels like a lifetime in the making, the SEC’s proposed new Regulation Crypto Assets rules could finally make public token sales easier in the United States.The proposal would allow qualifying issuers to raise up to $75 million during any 12-month period, and potentially allow projects to return to investors to raise more funds year after year as they build out their networks. That could create a new, staged model for token fundraising, and potentially make early allocations more attractive to investors betting on higher valuations later.But before you put the champagne on ice, it’s unlikely to bring back the freewheeling initial coin offering mania of 2017, according to Lee Reiners, a Duke University lecturing fellow and financial regulation expert. He tells Magazine: “My initial view is that the $75 million exemption could make public token offerings more feasible, but it is unlikely to produce a return to the ICO boom.” Could projects raise $75M every year? The Securities and Exchange Commission’s proposal, unveiled Aug. 18, creates two exemptions for certain investment contracts involving crypto assets. SEC Proposes New Regulation Crypto Assets. Source: SECThe first is a one-time exemption for startups for offerings of up to $5 million over four years, and the second is a larger fundraising exemption allowing up to $75 million in each 12-month period. Related: MiCA cracks down on USDT in Europe… but no one else caresThe latter is modeled in part on Regulation A and comes with disclosure and ongoing reporting requirements.Does the rolling nature of the $75 million limit mean a project could simply raise $75 million, build for a year, then come back for another $75 million?The answer appears to be yes.Drew Hinkes, partner at Winston & Strawn, tells Magazine the 12-month limitation would allow for “serial raises” of $75 million every 12 months, “provided they are actually distinct offerings.”So what’s the catch?Lilya Tessler, partner and leader of Sidley’s Global FinTech and Blockchain group, says that while “nothing prevents an issuer from relying on the exemption more than once,” each raise “isn’t automatic.”Subsequent raises would require filing a new offering statement and undergoing an SEC staff review, and issuers would have to keep filing annual and semiannual reports. They would also need to “disclose what the issuer raised under the exemption in the prior 12 months so the cap can be verified,” Tessler says. Still, the proposed rules offer a substantial upgrade from the status quo. A project seeking $225 million in total, for example, could potentially raise the funds in chunks and return to investors later with a more developed network — and a higher valuation.Could a cap create ICO-style FOMO?That raises another obvious question. Could the $75 million ceiling make early token allocations more sought-after, unleashing a frenzy of get-rich-quick-induced FOMO in the first round?Possibly. Reiners says that’s one potential outcome: “If investors expect a successful issuer to conduct later offerings at a higher valuation, an initial allocation may become more attractive precisely because it is limited.” However, that’s not dissimilar to how many token and equity sales are currently structured. SpaceX sold fewer than 5% of its total equity during the recent IPO. “Scarcity in both token sales and exempt securities offerings of traditional securities long predate this proposal — issuers have always been able to limit round sizes and can continue to do so,” says Tessler.Non accredited investors also won’t be able to go “all in” on any one token sale like they have in the past. Tessler says the SEC’s proposal limits them to buying “10% of the greater of their income or net worth,” regardless of which round they participate in.Related: White hat hacker recovers $2M from faulty 2016 ICO smart contractWhy this probably won’t be 2017 all over again There are other reasons not to expect 2017 to return — not least because a generation of crypto investors have been burned by the extravagant promises and terrible tokenomics of previous ICOs. Up to 90% of projects funded via ICOs between 2017 and 2019 ended up failing. Reiners points out that fundraising markets are “shaped by investor appetite, token economics, liquidity, custody, and the reputational damage left by the last ICO cycle.” The SEC estimates that around 130 offerings would use the two new exemptions each year, and around 475 issuers will potentially use the broader investment contract safe harbor. That’s less of a tsunami and more of a steady trickle.SEC proposed long-awaited regulation for primary token issuance. Source: Galaxy.But the SEC proposal is still very positive for token issuers trying to navigate a legal minefield around securities laws in the US — the kind Tezos and Telegram would have chewed their right arms off after their multimillion-dollar US securities-law battles. Rather than force issuers to self-evaluate whether their offerings fit within existing securities law frameworks, the SEC is proposing an explicit regulatory pathway for raising capital. As crypto lawyer Jake Chervinsky says, “not one day too soon.” What happens when the token starts trading?There are some potential minefield though. The SEC’s proposal says the investment contract associated with a crypto asset can continue to transfer to subsequent purchasers in secondary market transactions until the crypto asset separates from the issuer’s representations or promises.In other words, if the team selling a non-security token suggest that investors in the secondary market can reasonably expect to profit from essential managerial team efforts, then it could become subject to an investment contract.Related: ‘We refused to do an ICO’: The truth behind Canton’s tokenomicsHinkes sees that creating a potential problem:“If a transaction of a non-security covered crypto asset causes the transfer of the investment contract from cryptoasset seller to cryptoasset buyer, there is a risk that the sale of the crypto asset would be viewed as a securities transaction.” That could become a problem for exchanges and other trading venues.A new route for fundraising — but old risks remainSEC moves forward with Reg Crypto. Source: Jake ChervinskyThe potential for tokens to fall into a no man land between security and non-security also worries Reiners. He says that projects could learn how to operate within the new framework without addressing the underlying investor protection concerns:“A public offering exemption could become a vehicle for regulatory arbitrage […] A token issuer may satisfy the formal conditions for an exempt sale while continuing to market an asset whose value depends heavily on the issuer’s managerial efforts.”That would leave retail investors in the same grey area as a decade prior, exposed to “opaque disclosures, concentrated insider holdings, and aggressive promotion.”Magazine: Bitget CEO isn’t buying the Bitcoin rally — She’s waiting for $50KCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

MiCA left crypto lending outside its original rulebook — but now Brussels is considering whether to bring it in.On May 20, 2026, the European Commission asked stakeholders to weigh in on areas left outside the original Markets in Crypto Assets (MiCA) framework. These include issues around decentralized finance (DeFi) and crypto lending and borrowing. One area of contention involves lending vaults, which can channel billions of dollars into onchain credit markets without looking like conventional lending. Their legal status currently depends on non binding interpretations that they fall outside of MiCA and EU fund rules. Yuriy Brisov, an EU digital assets lawyer and partner at Digital & Analogue Partners, tells Magazine the law pertaining to vaults at present is unclear:“EU law has no category called a ‘vault.’ A lawyer therefore defines it the way a regulator would qualify it: by function, not by label.” That’s just one of myriad regulatory problems, since vaults can perform the economic functions of lending while spreading other functions over smart contracts and multiple participants rather than a single company. If Brussels decides lending should come inside the regulatory perimeter, what does that mean for DeFi, and where does it leave the people and protocols behind these vaults? Morpho puts the problem into practiceDecentralized lending protocol Morpho’s lending infrastructure gives some clues as to why this question will be so hard to answer. The way its vaults are set up and managed does not neatly map on to any existing regulatory model.Targeted consultation on the review of Regulation on the Markets in Crypto Assets (MiCA). Source: European ComissionIts Vault V2 architecture divides responsibilities between an owner, curator, allocator and sentinel. The curator configures strategy and risk parameters, while the allocator executes allocations and the sentinel has powers intended to reduce risk. While none of this establishes any of these participants as providing a regulated lending service under MiCA, it does show why identifying the relevant “provider” is less straightforward than with a conventional lender.Related: Bitwise to launch onchain vaults via MorphoJonathan Galea, a partner at Cahill Gordon & Reindel, explored the issue in a recent client update on lending vaults and their position under EU financial regulation. His analysis looks at how vault structures can sit across MiCA, stablecoin rules and European fund law.Galea says policymakers should be careful about treating lending vaults as a single category, telling Magazine, “lending vaults solve more practical problems than they create.”He says lending vaults help direct fragmented liquidity into lending markets, while other vaults may buy and sell crypto assets and should be treated differently:“Bring ‘DeFi lending’ into the perimeter as a single label, and structures that deserve opposite answers risk ending up captured together.”That would be important if Brussels decides to regulate lending, since a broad category covering “DeFi lending” could capture structures with very different economic functions—and people exercising control over them.Who should actually be regulated?MiCA currently excludes crypto asset services that are provided in a “fully decentralized manner,” although it can apply where only part of an activity is performed in a decentralized way. Morpho’s Vault V2 architecture. Source: MorphoOne possible solution would be to make decentralization the dividing line, but Galea argues that could disadvantage newer protocols. He says:“Decentralization is a spectrum and a function of time: a test built on it would penalize newer, more novel protocols while entrenching mature incumbents that have had years to distribute control.”Brisov says the focus should instead be on the structure of the vault and the control people have over it:“The safer ground is structural: there is no undertaking, no appointed manager, the holder has a direct coded claim on the pool, and the user can exit before any parameter change takes effect.”He says if Brussels decides that lending and borrowing warrant regulation, they should be explicitly added to the list of regulated crypto asset services rather than broadening the definition of a crypto asset service provider itself.Related: ‘DeFi doesn’t exist anymore,’ just onchain finance: Andre CronjeCurve Finance founder Michael Egorov argues that the rules also need to account for the differences between decentralized lending and conventional finance. He says:“If DeFi lending is ever brought into the scope of regulation, it should be treated completely differently. DeFi doesn’t need some of the safeguards which traditional lending requires, and yet, at the same time, it may need others.”Egorov says regulation should be approached “really carefully,” and that a dedicated framework could improve safety and open DeFi lending to new users, while avoiding rules that some protocols cannot comply with because of how they’re built.The Commission’s consultation closes Sept. 30, and what follows could determine whether lending vaults remain outside MiCA or become subject to a new regulatory framework.For Brussels, the challenge is not simply whether to regulate DeFi lending; it’s how to write rules that distinguish between very different forms of onchain lending and the people (if any) that actually exercise control over them.Magazine: 200,000 fake AI ‘victims’ deployed to scam bait online fraudstersCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

Europe’s crackdown on Tether’s USDT is entering a new phase.When Revolut told European users it would delist USDT after Aug. 31, it became another in a long line of European platforms restricting access to the world’s largest stablecoin as firms adapt to the requirements of the EU’s Markets in Crypto-Assets (MiCA) regulation.MiCA’s stablecoin rules have been phasing in since 2024, and the EU-wide transition period ended on July 1, putting further pressure on platforms to drop tokens that don’t meet the rules.Yet according to Artemis Analytics, Tether being squeezed out of a major market has shown little sign of triggering a major shift in USDT activity. Alex Weseley, research and data, tells Magazine:“The data does not indicate any noticeable change in USDT supply or demand attributable directly to MiCA coming into effect in Europe… MiCA didn’t trigger a major venue or chain migration.”So why is demand for Tether holding up so well?Stablecoins become financial infrastructureOne reason USDT demand is proving resilient is that dollar stablecoins are being used for more than trading or saving in other regions of the world. In Argentina, for example, a country long obsessed with stuffing dollars into mattresses and storing wealth outside the traditional financial system, stablecoin activity has continued to grow even though restrictions on accessing actual US dollars have eased.USDT supply share by chain at MiCA milestones. Source: Artemis.Lemon, an Argentine crypto and financial services platform, processed $9.3 billion in total volume in 2025, up 60% from the previous year. Transactional users grew 70% to nearly 1.8 million and stablecoin volume grew 45% year-on-year.Related: Why Argentina is blocking Polymarket despite its global growthThat suggests stablecoins are doing more than simply filling a gap created by restrictions on access to dollars; they’re becoming part of the way people move and spend money. Ignacio Gimenez, Lemon’s business and planning manager, tells Magazine:“The role of USDT and other dollar stablecoins is evolving. What we’re seeing is a shift from stablecoins as a store of value to stablecoins as financial infrastructure.”He says stablecoin activity is “increasingly driven by payments, cross-border transfers and global financial services rather than only by savings,” adding that Argentine users can pay in Brazil through PIX using pesos, receive dollars or euros from overseas and have them credited as USDC, or move between bank dollars and digital dollar balances.That makes stablecoin demand harder to measure by simply looking at which tokens are available on regulated exchanges.MiCA is changing the European gatewayLemon’s experience highlights a shift in user behavior in one of Latin America’s biggest economies, and there are signs that emerging markets are beginning to follow the trend. Artemis data shows the number of daily users on Binance Smart Chain rose from about 318,000 in June 2024 to 1.56 million by July 2026, while daily users on Tron increased 44% to around 908,000. These chains are favored by day to day stablecoin users for their low fees. Weseley says:“That looks like expanding global and emerging market usage rather than a Europe-specific migration, and there’s no clear MiCA-timed break in the chain data.”That doesn’t mean MiCA is irrelevant: it is certainly changing which stablecoins regulated European platforms can offer, and reshaping the stablecoin market inside the bloc. USDT daily active addresses by chain at MiCA milestones. Source: Artemis.Maksym Sakharov, chief executive and co-founder of WeFi, a crypto financial infrastructure company, says that regulation is primarily changing how users access dollar stablecoins, rather than removing the underlying demand, whether it’s for trading, payments, or cross-border transfers. He tells Magazine:“Users do not choose a stablecoin only because it is available on one regulated platform. They choose it because counterparties use it, liquidity is deep, and it works across many markets.” For some platforms, the shift began well before the MiCA deadline. Chief executive of OKX Europe, Erald Ghoos, says OKX has not offered USDT to European users for around two years, so the latest MiCA deadline did not make much material difference.Europe’s alternatives have a dollar problemPerhaps the bigger question in Europe is what European users will embrace instead. Dollar-denominated stablecoins have a powerful advantage since the crypto market has always treated the greenback as its primary benchmark.USDT transfer volume share by chain pre vs. post MiCA. Source: Artemis.While Ghoos doesn’t expect that to change globally any time soon, he says that institutional interest in euro-denominated stablecoins is picking up. He says:“What we are seeing from institutional players is interest in creating more EUR-denominated stablecoins, which is worth watching as it develops.” For retail users, euro-denominated stablecoins could also make practical sense by removing additional friction, like currency conversion, from transactions. But while MiCA may determine which products are available through regulated European gateways, it cannot change the dollar’s role in global crypto markets. Magazine: El Salvador’s Bitcoin experiment turns 5: ‘It was for us, not them’Cointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

Solana is preparing to change how it charges for computing resources on the network.Solana Improvement Document (SIMD-0553) would make its most resource-intensive users pay more while cutting the costs for simpler transactions. As a bonus, it would increase SOL’s burn rate in stages — and one day could even help make it deflationary.Cavey, a researcher at Solana infrastructure firm Temporal and author of the proposal, tells Magazine that fees currently don’t reflect the real costs:“If I submit a transaction that does nothing versus a transaction that burns 200 million CPU cycles, I’m charged the same amount.” This proposal would change that by tying fees more closely to the resources each transaction requests. Rather than going to validators, the resource fee would be burned, removing SOL from circulation. Of course, reducing validator income has not been welcomed by all. Contributor bji argues on github:“I like the aspect of this proposal that gives tx submitters extra incentive to be accurate with CU limits. Everything else I’m meh to negative on. ‘More burn’ should not be a goal. Validator incomes should not be arbitrarily reduced.”SIMD-0553 entered Solana’s new onchain governance process in early August and cleared its initial support phase on August 4. It is currently in the support and discussion phase, which typically lasts seven epochs, or roughly two weeks. If it’s approved, it would change the incentives around Solana’s cheap blockspace. So what’s the catch? Wasting resources becomes expensiveCavey says that Solana’s current fee structure creates a problem for developers.Core Solana devs have spent years making the network faster, but applications have almost no financial incentive to stop wasting resources — an inefficient transaction costs the same as an efficient one. Related: Ethereum, Solana led crypto hack losses in H1 2026: Blockaid“By installing this resource pricing right now, suddenly app developers have to optimize,” Cavey says.If the proposal is adopted, developers who reduce resource use could lower costs for end users and make their apps more attractive. Developers who consume more of Solana’s computing capacity would have to pay their fair share.Solana Improvement Document (SIMD-0553). Source: Solana Foundation GitHubCavey says the proposal is particularly aimed at computationally wasteful arbitrage, where searchers can submit huge numbers of transactions that mostly fail, while paying very little.In the past 30 days, he says, five of the traders with the highest failure rates submitted 11.5 million transactions, consuming 929 million compute units across 2,477 trades that generated $16,091 in profit, while paying just 78 SOL in fees.A resource fee would push arbitrage searchers toward more informed and reactive strategies.Stablecoin and token transfers could become roughly 20% cheaper, Cavey says. Temporal’s modeling also finds that vote transactions would cost around 12.3% less and oracle updates 16.9% less under the proposed model.The trade-off? Some trading activity would become considerably more expensive.Temporal estimates that a high-priority swap routed through DFlow would cost 9.72% more under the proposed terminal fee rate, while a mid-priority OKX swap would cost 301% more and a pump.fun swap with zero priority would cost 3150% more. That means some of the network’s heaviest users could see their transaction costs balloon, particularly traders using bots that submit large numbers of transactions. Don’t worry though, as the fee increase is off a low base. Cavey argues that even the most compute-intensive transactions would cost around $0.05 under the proposed model, compared with the $2 to $5 fees a user might pay to swap $100 on a centralized exchange.Who pays more, who pays less. Source: Temporal.xyzThe current proposal rejects a uniform increase to Solana’s existing 5,000-lamport fee, arguing that it would disproportionately hurt high-volume senders such as market makers while still failing to properly price resource usage.Other costs to consider“There have been a few people that have raised concerns about the parameters, but overall, everyone’s been very supportive,” Cavey says, citing validator income, higher costs for high-frequency users and increased complexity among the core issues.One contributor, mschneider, asks why fees should be based on the resources a transaction requests rather than what it actually uses. “Units used seems more natural,” he says.Cavey says there’s a reason the fee is based on the resources a transaction requests, rather than what it actually uses: it lets users know the cost upfront and allows validators to check they can afford it before processing the transaction. But it also means users can pay for resources they don’t end up using, giving developers an incentive to estimate their needs accurately. Validators could initially see a small reduction in base-fee revenue by around 4%. While Cavey says the parameter can be adjusted to offset that impact if needed, some contributors like bji remain unconvinced and believe validator income should take precedence over the additional burn.Related: MoneyGram expands crypto cash ramps to SolanaThe proposal also raises questions about complexity, with some contributors questioning whether the new fee model could make Solana harder to use. Cavey rejects the concern, saying most users will not have to calculate fees themselves because applications and exchanges generally handle it. Automated traders are already “sophisticated” enough to adapt to changes in Solana’s fee structure, he says.What about the SOL burn?SIMD-0553 would increase the amount of SOL burned by transaction fees, reducing more of the token from circulation rather than paying it to validators.According to the proposal, the current daily burn of around 648 SOL could rise to roughly 7,500 to 9,000 SOL at the proposed terminal fee rate, representing a roughly 12 to 14-fold increase if current resource demand remains unchanged. SIMD-0553 would increase the amount of SOL burned by transaction fees. Source: Temporal.xyzCavey says the higher burn could eventually push SOL into deflationary territory:“If Solana wins, there’s a chance that Solana could actually become a deflationary currency.”Burning the resource fee also reduces incentives for validators to include unnecessarily resource-intensive transactions.Solana currently issues roughly 60,000 SOL a day, so even a 9,000-SOL daily burn would not by itself make the token deflationary (although a separate proposal called SIMD-0550 would curb inflation faster than currently scheduled). Network activity would need to grow substantially before the burn outweighed new issuance. Cavey says that would be “a nice secondary effect” rather than the main objective.“The primary goal is to align core devs, developers, and app developers to make Solana faster. That is objective number one, and that is enough of a reason for this proposal, in my opinion.”Magazine: El Salvador’s Bitcoin experiment turns 5: ‘It was for us, not them’Cointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

It’s been five years since El Salvador became the first country to adopt Bitcoin as legal tender. President Nayib Bukele announced the plan at the Bitcoin conference in Miami on June 5, 2021, to the jubilant cries and applause of the Bitcoin community, who hailed the tiny Central American nation as living proof that BTC could be sovereign money.Bukele sold the experiment as a way to bank the unbanked, slash remittance costs, and attract investment to the impoverished nation.But five years on, who did the experiment benefit, and what did it actually achieve? Dr. Tobias Boos, a senior scientist at the University of Vienna who leads a research project examining the political economy of Bitcoin in El Salvador, tells Magazine:“There is little doubt that the project was a failure if we take seriously the reasons Bukele gave for its adoption. Foreign direct investment in this sector didn’t increase, it did not effectively bank the unbanked, and it is not widely used for remittances.”Yet El Salvador’s Bitcoin bet undeniably changed the conversation around the world’s number-one cryptocurrency, and turned nation-state adoption from a theoretical possibility into a living, breathing reality. Whether it succeeded or failed depends on what you think El Salvador was trying to achieve.Five years into El Salvador’s Bitcoin betIn a video message played at Bitcoin 2021, Bukele said the adoption of Bitcoin would generate jobs in the short term and “help provide financial inclusion to thousands outside the formal economy.”Today, the evidence for mass adoption is difficult to square with that ambition.Research by Boos, Grigera and Schmid in 2025 found that the Salvadorans who adopted Bitcoin tended to be young, male, urban, more highly educated, and, perhaps more importantly, already banked. Boos concludes that, “Mass adoption by citizens did not occur.” El Salvador had one of the region’s lowest levels of banking access at the time, with just 35.9% of people over 15 holding a bank account in 2021, according to World Bank data. Account ownership at a financial institution (% of population ages 15+) – El Salvador. Source: World BankYet the government’s Chivo Bitcoin wallet did little to solve the problem: it could transfer funds to bank accounts, but didn’t remove the underlying barriers preventing unbanked Salvadorans from accessing the financial system in the first place.According to Boos and his colleagues, the same problem emerged with remittances, another pillar of Bukele’s pitch. In 2024, remittances accounted for around 24% of El Salvador’s gross domestic product, with the United States providing a full 98% of the total. But El Salvador adopted USD as its official currency more than 20 years ago, and having most remittances arrive from a country with the same currency removed one of the major cost reductions that Bitcoin could theoretically offer: currency conversion.Related: Bitcoin will never fall below $60K again: Nansen founderDespite the promise that Bitcoin could make these transfers cheaper, crypto wallets accounted for barely 1% of remittances by 2024, down from a peak of 1.7% in 2020-21.It suggests the government’s early efforts to stimulate adoption failed to translate into sustained use. Chivo offered users $30 in Bitcoin for signing up, but the National Bureau of Economic Research’s nationally representative research found that more than 60% of early Chivo users never made another transaction after spending their free BTC.Joe Nakamoto, a Bitcoin-focused journalist who has repeatedly reported from El Salvador, found a similar disconnect on the ground. In a recent video documenting one of his visits, he said he tested Bitcoin acceptance at 21 shops in a San Salvador mall, and found that only four accepted Bitcoin, and just one did so smoothly. He tells Magazine:“It’s very, very hard, borderline impossible to genuinely live on Bitcoin in El Salvador. Unless you’re just eating pupusas on the beach in El Zonte, and then going across to the other Bitcoin circular economies and finding workarounds.” When the IMF pulled the plugThe government has also faced international pressure to retreat from its Bitcoin experiment. In December 2024, it reached a $1.4 billion financing agreement with the International Monetary Fund, under which it agreed to scale back its involvement in Bitcoin. El Salvador’s experiment with Bitcoin as Legal Tender. Source: NBERThe deal was approved in February 2025, and in January, the government amended its Bitcoin law to make acceptance voluntary, require taxes to be paid in US dollars and limit public sector involvement in Bitcoin-related activities, effectively dismantling the most radical parts of Bukele’s experiment. While Bitcoin could still be used voluntarily, the state no longer compelled businesses to accept it or used it as part of the country’s public financial system.The IMF later found that Bitcoin had produced “no evidence” of a beneficial use case for the unbanked and had had minimal impact on financial inclusion. Boos says:“The ‘soft adoption,’ as we refer to it in one of our articles, never led to mass adoption for payments. I am not aware of any instances where tax payments were made using Bitcoin, and the infrastructure has largely remained unused.” What Bitcoin actually did achieveIf El Salvador failed to turn Bitcoin into everyday money, it still managed something no country had done before: it made nation-state Bitcoin adoption real. Before 2021, the idea of a government adopting Bitcoin was still largely hypothetical; El Salvador made it real. As Samson Mow, chief executive of Bitcoin infrastructure firm JAN3, tells Magazine:“The question in front of every president or finance minister shifted from whether a sovereign could hold Bitcoin to why it hadn’t.” The experiment also thrust El Salvador into the center of the global Bitcoin movement, with many prominent Bitcoiners, including Max Keiser and Stacy Herbert, making Bitcoin country their new home. Herbert later became director of El Salvador’s National Bitcoin Office, showing just how closely intertwined parts of the Bitcoin movement have become with the government. Related: IMF says tokenization could transform settlement and financial stabilityBitcoin Beach, the grassroots project in El Zonte that predated the national experiment, is still one of the clearest examples of a functioning Bitcoin economy, with local businesses, hotels and tourism operators continuing to accept Bitcoin, even after the government made acceptance voluntary. Nakamoto’s reporting has also documented several concrete success stories for everyday Salvadorans, including Mama Rosa, who saves Bitcoin from her pupusa stand, and Napo, who expanded from one taxi to a fleet. Bukele’s government even went further than simply holding BTC on its balance sheet or making it legal tender by promoting plans for Volcano Bonds and Bitcoin City.After repeated delays, the IMF agreement effectively kneecapped those projects’ progress, but the symbolic impact still matters. Mow explains:“Bitcoin gained a proof of concept, and El Salvador gained a global platform.” There’s also an important distinction between what El Salvador achieved for Bitcoin and what Bitcoin achieved for El Salvador. Boos argues that the symbolic significance has largely been “for” the international Bitcoin community, rather than evidence of economic success “in” El Salvador. Nakamoto says:“It looks more like a marketing campaign for foreigners than a genuine economic strategy for Salvadorans. It’s beautiful branding, pointed at people with the passports and the capital. Bukele is a razor-sharp operator. He knows exactly who’s watching and who’s clapping. The Bitcoin country strategy, it’s not for them. It breaks my heart to say it, but it’s for us.” The uncomfortable part: Bitcoin and BukelePerhaps the hardest question is what El Salvador’s Bitcoin experiment says about the relationship between Bitcoiners’ ideals of individual freedom and the government that imposed it.IMF Executive Board approves 40-month fund facility. Source: IMFBukele has concentrated power during his time in office, and the state of emergency introduced to combat gang violence in March 2022 remains in place more than four years later.Human Rights Watch says the government has continued to remove checks on executive power, and local and international human rights groups have documented mass arbitrary detention and due process violations under the state of emergency. But judging Bukele only through that lens risks missing why he remains so popular at home. El Salvador was once in the grip of powerful gangs, with many Salvadorans living with daily threats of extortion, violence and death. The official homicide rate fell from 53.1 per 100,000 people the year he took office, to just 1.3 per 100,000 in 2025.Bukele’s crackdown has transformed public security, and many Salvadorans view the trade-off between security and civil liberties very differently from critics abroad. Nakamoto says:“It’s a country that has serious scars. Bukele has saved the nation in many ways. He kicked out the gangs and also he has done wonderful things for Bitcoin in terms of putting it on the world map.” While Mow acknowledges the positive impact of Bukele’s gang crackdown, he says the broader implications of normalizing emergency powers cannot be ignored: “In the hands of someone with restraint, those same powers can accomplish real things, like El Salvador’s crackdown on the gangs. But it’s important to think ahead. What serves a leader with restraint today can just as easily serve one without restraint once there’s a change of guard.”For Bitcoiners, that leaves an uncomfortable tension. El Salvador’s Bitcoin experiment has become inseparable from the government that made it possible, and from a president whose record is far more complicated than the Bitcoin success story alone suggests. That may ultimately be the most difficult part of assessing El Salvador five years on: Bitcoin gave Bukele a global platform, and Bukele gave Bitcoin something it had never had before — a nation-state willing to put it at the center of its economic strategy.Magazine: Strategy became a symbol of the dot-com crash: Could history repeat?Cointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.