Bitcoin as Legal Tender: Impacts on the Business Environment of El Salvador

Abstract

This bachelor’s thesis examines the effects of the Bitcoin Law, under which Bitcoin was recognized as legal tender in El Salvador in 2021, on the country’s business environment, with a particular focus on small and medium-sized enterprises (SMEs). The study is based on a secondary analysis of empirical studies, institutional reports, and available data covering the period 2019–2024. Using descriptive methods and a comparative approach with selected Latin American countries, it assesses the policy’s impact on transaction costs, access to payment services, and financial inclusion. The findings indicate that Bitcoin adoption among SMEs remains low and selective, while aggregate macroeconomic indicators do not confirm a structural break. Declining remittance costs and the expansion of cashless payments are driven primarily by the modernization of conventional payment infrastructure and traditional digital financial services. Thus, based on the available findings, the Bitcoin Law is not confirmed as a technological shortcut to development. Improving conditions for SMEs appears to depend mainly on strengthening institutions, enhancing financial and digital literacy, and building inclusive payment infrastructure in combination with a predictable regulatory framework. The thesis concludes with recommendations for El Salvador, the business sector, and other countries in the region.