Originally published 2021-06-12.
In June 2021, days after El Salvador announced it would make Bitcoin legal tender, Panamanian congressman Gabriel Silva said on Twitter that Panama "cannot be left behind" and promised to bring a cryptocurrency bill to the National Assembly. He kept his word: the bill passed in April 2022. But it never made Bitcoin an official currency, and in July 2023 Panama's Supreme Court struck the whole law down. Paraguay, often named alongside Panama at the time, did not adopt Bitcoin either.
Here is what Silva proposed, why El Salvador's move set off a wave of copycat ideas in Latin America, and how the story ended.
What Gabriel Silva proposed
Silva, a young independent deputy known for his interest in technology policy, posted his message on 7 June 2021. He argued that if Panama wanted to be a genuine hub for technology and entrepreneurship, it needed to embrace cryptocurrencies, and he invited people interested in shaping the bill to get in touch.
Importantly, he was announcing an intention, not a finished law. His tweet did not specify that Bitcoin would replace or sit alongside the US dollar, which has circulated as legal tender in Panama since the early twentieth century next to the local balboa. Many headlines nonetheless reported that Panama was about to "adopt Bitcoin", which went well beyond what had been said.
El Salvador's Bitcoin law: the trigger
Silva was reacting to El Salvador's president, Nayib Bukele, who announced his plan in a video message to the Bitcoin 2021 conference in Miami on 5 June 2021. Four days later, on 9 June, El Salvador's Legislative Assembly approved the Bitcoin Law by 62 votes out of 84. It took effect on 7 September 2021, making El Salvador the first country to give Bitcoin legal-tender status, alongside the US dollar.
Bukele's case rested on three main arguments:
- Remittances. Salvadorans abroad, mostly in the United States, send home billions of dollars a year; remittances were equal to about 23% of the country's GDP in 2020. Supporters argued Bitcoin could make those transfers cheaper than traditional money-transfer services.
- Banking access. A large share of Salvadoran adults, often put at around 70%, had no bank account. A phone-based wallet promised a way into the financial system.
- Investment. Bukele suggested that attracting even a small slice of global Bitcoin wealth could transform the economy. That claim was never independently backed up and should be read as a political pitch.
To encourage uptake, the government launched the Chivo wallet in late 2021 and gave every adult who signed up $30 in Bitcoin.
Why the idea spread across Latin America
El Salvador's announcement landed at the height of the 2021 crypto boom, when Bitcoin prices were near record highs. In several Latin American countries, politicians saw a chance to look modern and to court tech investors. A Paraguayan lawmaker also spoke publicly about crypto legislation, and politicians elsewhere in the region voiced interest on social media.
Panama looked like a natural candidate. It is a regional financial centre, its economy already runs on the US dollar, and it has long tried to attract foreign companies. Silva framed crypto as the next step in that strategy.
What happened to Panama's crypto bill
Silva's bill went through the National Assembly and was approved in April 2022. Rather than making Bitcoin legal tender, it set out rules allowing several cryptocurrencies, including Bitcoin, to be used for payments and created a framework for the crypto industry. President Laurentino Cortizo raised objections and declined to sign it as written. The question went to the Supreme Court, which in an order published on 14 July 2023 declared the entire law unconstitutional, siding with the president's objections and finding that it had been improperly passed.
So, despite the headlines of 2021, Panama never adopted Bitcoin as an official currency, and its broader crypto law did not survive.
Paraguay's different path
Paraguay's crypto bill, introduced by senators in July 2021, also had nothing to do with legal tender. It aimed to regulate crypto mining, trading and custody, and in particular to give miners access to the country's cheap hydroelectric power at a capped industrial rate. It passed both chambers of Congress, but President Mario Abdo Benítez vetoed it in full on 29 August 2022, after the state electricity company warned the tariff cap might not cover costs.
How El Salvador's experiment turned out
El Salvador's own experience explains why neighbours grew cautious. Surveys by the country's Iudop polling institute found that the share of people using Bitcoin for purchases fell from about a quarter in 2021 to around 8% by 2024, and Bitcoin carried only a small fraction of remittances. Many users spent their $30 bonus and stopped using Chivo.
The International Monetary Fund urged the government to drop Bitcoin's legal-tender status. Under a $1.4 billion IMF agreement reached in December 2024, El Salvador agreed to make acceptance voluntary for businesses, stop taking taxes in Bitcoin and wind down Chivo. In early 2025, lawmakers amended the law so that Bitcoin was no longer legal tender in the full sense, though the government continued to hold Bitcoin reserves.
What this means if you are curious about crypto
The story is a useful reminder that a politician's tweet is not a law, and a law is not the same as everyday use. When you see a headline that a country is "adopting Bitcoin", look for the bill text, whether it passed, and whether it survived the courts. Cryptocurrency prices also swing sharply, so if you decide to buy any, choose a regulated platform, use strong security and only put in money you can afford to lose.
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Sources: TheStreet, 7 June 2021; Wikipedia: Bitcoin in El Salvador; Central Banking: Panama supreme court rejects crypto law; The Block: Paraguay's president vetoes proposed crypto industry regulation
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